ills 


lliills 

;i!y[i;i!;!l#;n!:;\;:;i;;i:'^i;!!i;!!-  :  jinn!      ,:;:!;;;|i:;':^--i-:r':';;' ., 
iiii iiip^iii I; '=;; -l^^f'M1  •  V: :  •-:'- •'••.,...-•       •-: 


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University  of  California. 

BRARY   (>F 

DK.     FRANCIS     LIE  HER, 

ry  n  ml  Law  in  Columbia  College,  Now  York, 


TH  '.:  <;IIT  or 

MICHAEL     REESE, 

1973. 


Library. 


TREATISE 


POLITICAL   ECONOMY, 


GEOEGE    OPDYKE. 


NEW  YORK  : 
PUBLISHED   FOR   THE    PROPRIETOR, 

BY  G.  P.  PUTNAM,    BROADWAY. 


1851. 


ENTERED 
According  to  Act  of  Congress,  in  the  year  1851,  by 

GEORGE    OP  DYKE, 

In  the  Clerk's  Office  of  the  District  Court  of  the  United  States 
For  the  Southern  District  of  New  York. 


WM    C.  BRYANT  ti  CO..    PRINTERS, 

18  Nassau  street,  cor.  Pine. 


PREFACE. 


THE  present  brief  Treatise  originated  in  an  effort  to 
ascertain  the  true  commercial  policy  of  our  country. 
That  effort  was  commenced  some  years  ago,  and  was  first 
directed  to  an  examination  of  the  arguments  presented 
in  favor  of  the  Protective  system,  and  the  Revenue  Tariff 
system,  which,  it  is  well  known,  are  the  only  two  lines 
of  commercial  policy  that  have  been  adopted  by  our 
government  or  advocated  by  any  considerable  number  of 
our  people.  Meeting  with  nothing  in  that  quarter  which 
could  be  fairly  regarded  as  a  demonstration  of  the  sound- 
ness of  either  system,  or  as  a  satisfactory  solution  of  the 
main  question,  the  author  next  resolved  to  investigate 
the  subject  for  himself — not  by  consulting  elaborate 
works  on  Political  Econony,  (the  source  whence  others 
have  imbibed  such  opposite  views,)  but  by  an  original 
inquiry. 

In  pursuance  of  that  design,  an  investigation  of  the 
problems  of  Commerce  was  entered  upon.  A  mere  glance 
at  the  subject  sufficed  to  show  that  the  intimate  connexion 
between  Commerce  and  Money  must  necessarily  render 
the  inquiry  a  fruitless  one,  unless  it  were  made  to  em- 
brace a  consideration  of  the  latter  Nor  had  much 
progress  been  made  in  this  direction  before  it  also  be- 
came apparent  that  the  principles  involved  in  both  com- 
mercial  and  monetary  problems  were  so  dependent  on 


IV 


PREFACE, 


other  and  more  general  principles  of  Political  Economy, 
that  it  would  be  quite  impossible  to  frame  satisfactory 
theories  with  regard  to  them,  without  having  first  ex- 
plored the  whole  of  that  vast  field.  The  inquiry  was 
accordingly  extended  to  these  broader  limits. 

After  a  careful  investigation  of  the  whole  subject,  the 
author  succeeded  in  framing  a  general  theory,  which 
appeared  to  his  own  mind  to  be  not  only  consistent  in 
all  its  parts,  but  unexceptionable  as  a  whole.  A  subse- 
quent examination  of  some  of  the  best  economic  treatises 
extant,  served  to  confirm  this  impression ;  for  while  the 
theory  was  found  to  differ  in  ma-ny  important  features 
from  that  of  any  other  writer,  a  careful  examination  of 
tlu?  points  of  difference  convinced  the  present  writer  that 
his  own  views  were  correct.  This  conviction  naturally 
suggested  the  idea  of  elaborating  the  inquiry  into  a  brief 
but  sy.-ti'inatic  Treatise,  to  be  submitted  to  the  judgment 
of  others.. 

After  some  hesitation,  growing  out  of  the  author's 
distrust  of  his  ability  to  perform  such  a  task  either  with 
credit  to  himself  or  with  advantage  to  others,  it  was  de- 
cided to  adopt  that  suggestion.  The  attempt  was  ac- 
cordingly made,  and,  in  the  midst  of  more  engrossing 
occupations,  persisted  in,  until  the  work  had  been  moulded 
into  the  form  in  which  it  is  here  presented,  or  very 
nearly  so..  The  effort  was  then  abandoned  and  the  manu- 
script thrown  aside,  under  the  conviction  that  neither 
the  logic  nor  the  language  was  sufficiently  accurate  for  a 
work  making  pretensions  to  the  character  of  a  scientific 
treatise.  That  conviction  is  still  felt,  and  it  is  not  un- 
likely that  it  would  have  still  deterred  the  writer  from  ven- 
turing on  the  present  step,  had  not  his  interest  in  the 
subject  been  renewed  and  strengthened  by  meeting 
with  the  elaborate  work  of  John  Stuart  Mill,  which 


PREFACE. 


made  its  appearance  in  the  year  1848,  shortly  after  the 
period  just  referred  to.     From  the  known  ability  of  that 
author,  not  less   than  from  his  prior  efforts  on  kindred 
topics,  we  had  a  right  to  expect  from  him  a  more  perfect 
exposition  of  the  truths  of  Political   Economy  than  had 
before  appeared  in  any  quarter.     Nor  was  that  expecta- 
tion greatly  disappointed.     All  who  are   familiar   with 
the  subject  must  admit  that  his  treatise  is  more  system- 
atic and  comprehensive,  and,  as  a  whole,  more  truthful 
than  that  of  any  other  laborer  in  the  same  field.    Never-  \f 
theless,  it  is  far  from  being  perfect.     A   careful    exam- 
ination of  it  has  convinced   the   present  writer  that  it 
contains  numerous  errors,  some  of  which  are  so  funda- 
mental that  their  virus  pervades  the   whole   work,  and 
vitiates    many   of  its   conclusions.     Besides,    like   most 
other  scientific  works  on  this  subject,  it  is  the  produc- 
tion of  one  who  has  been  reared   and   educated  under 
political  institutions  very  different  from  ours  ;  and  it  is 
chiefly  designed  to  meet  the  wants  of  British  readers. 
For  these  reasons  we  must  expect  to  find  it  imbued  with 
ideas  and  opinions  in  which  we  cannot  concur,  as  well  as 
incumbered  with  discussions  of  no  direct  interest  to  us. 
What   we   republicans    need,   is   a  system   of  Political 
Economy  in  perfect  harmony  with  the  other  portions  of 
our  political  edifice.     In  other  words,  we  want  an  hon- 
est, straight-forward  system — a  system  grounded  on  the 
broad  principles  of  Justice  and  Equality,  and  in  all  its 
doctrines  and  legislative  applications   solely  designed  to 
illustrate  and  enforce  those  principles.     We   have   no 
right  to  look  for  anything  of  this  kind  from  quarters  in 
which  the  opposite  principles   of  government  are  taught 
and  practised  upon  ;  but  we  have  a  right  to  expect  it 
from  Americans.  Indeed  we  are  clearly  required  to  devise 
such  a  system  for  our  own  guidance  :  our  duty  to  ourselves 


VI  PREFACE. 

and  to  the  form  of  government  we  Lave  adopted,  alike 
demand  it.  Nor  can  we  much  longer  neglect  this  duty 
without  forfeiting  our  claims  to  the  title  of  consistent 
Republicans. 

Viewing  the  subject  in  this  light,  and  believing  that 
the  suggestions  herein  contained  can  scarcely  fail  to 
contribute  something  to  the  advancement  of  this  impor- 
tant branch  of  political  science,  the  author  has  finally 
determined  to  place  his  effort  before  the  public.  He 
submits  it  for  the  consideration  of  other  inquirers,  and 
asks  attention  to  it,  not  as  a  correct  and  finished  treatise, 
but  as  a  rudely  drafted  model  of  what  such  a  treatise 
should  be.  If  it  shall  be  found  to  merit  even  this  char- 
acter, it  must  prove  useful,  since  it  will  serve  to  furnish 
hints  to  those  who  have  the  ability  and  leisure  requisite 
for  the  elaboration  of  a  perfect  system. 

But  while  such  is  the  general  design  of  this  volume, 
it  is  proper  to  state  that  its  composition  and  publication 
have  been  specially  prompted  by  the  author's  de- 
sire to  disseminate  his  peculiar  views  on  the  subject 
of  Money.  These  views  constitute  one  of  the  sections 
of  a  connected  system,  and  therefore  could  not  be  pre- 
sented separately  without  destroying  a  part  of  the  evi- 
dence on  which  they  rest.  They  possess  the  equivocal 
merit  of  originality,  to  say  the  least.  It  is  hoped, 
indeed,  that  they  possess  more  substantial  merits ;  but  of 
this  the  reader  must  judge.  They  will  be  found,  upon 
examination,  to  embrace  the  outlines  of  a  plan  for  fur- 
nishing a  paper  currency,  which,  although  irredeemable, 
and  therefore  free  from  cost  of  production,  will,  it  is  be- 
lieved,  perform  the  offices  of  money  much  better  than 
either  bank  notes  or  coin. 


CONTENTS. 


Page. 
INTRODUCTION. — Political  Economy  Defined. 1 

PART    L 
OF  THE  SCIENCE  OF  WEALTH. 

CHAPTER  I. 
Of  the  Origin  and  Design  of  "Wealth 15 

CHAPTER  II. 

Of  the  Nature  of  "Wealth ;  and  of  the  expedients  resorted  to 
by  mankind  for  the  purpose  of  facilitating  its  production 
and  preservation 31 

CHAPTER  III. 

Of  the  Natural  Laws  of  Trade.     General  remarks 59 

Section       L  Of  the  Principles  ichich  control  the  Production 

of  Wealth 62 

"         II.  Of  the  Principles  which  control  its  Distribution.  86 

"       TIT.  Of  the  Principles  which  control  its  Consumption.  110 
Of  the  rate  of  Profit  and  the  degree  of  Wealth 

which  the  Laws  of  Trade  have  established 117 

PART  II. 

OF  THE  ECONOMIC   FUNCTIONS  OF  GOVERNMENT. 
CHAPTER  L 

Preliminary  remarks.     The  General  Purposes  of  Government 

considered 141 

CHAPTER  IL 
Of  the  Institution  of  Property 155 


Vlll 

CHAPTER  IIL 
Of  Property  in  Land 176 

CHAPTER  IV. 
Of 'the  Regulation  of  Commerce  ;  and  of  Taxation. 

Section       I.  General  remarks 199 

"  II.  Of  Tariff  Laws,  considered  as  a  means  of  rais- 
ing Revenue;  and  of  Direct  Taxation.  The 

merits  of  the  two  methods  compared 207 

"  III.  Of  Tariff  Laws,  considered  as  a  means  of  regu- 
lating Commerce  and  Production — with  special 
reference  to  their  internal  or  domestic  conse- 
quences    223 

"      IV.  The  same  subject  continued — with  special  refer- 
ence to  external  or  international  consequences. .  239 
V.  Of  Free  Trade  and  Direct  Taxation 258 

CHAPTER  V. 
Of  Money. 

Section       I  Of  Metallic  Money 'm        265 

II.  Of  Convertible  Paper  Money 284 

"       IIL   Of  Inconvertible  Paper  Money 296 

CHAPTER  VI. 

Of  Credit ;  and  of  the  Right  of  Property  in  Actions 311 

CHAPTER    VII. 
Of  Slavery 327 


A  TREATISE  ON  POLITICAL  ECONOMY. 


INTRODUCTION. 

POLITICAL  ECONOMY,  as  usually  defined,  is  the  sci- 
ence that  treats  of  the  general  principles  and  laws  which 
affect  the  production,  distribution  and  consumption  of 
things  having  an  exchangeable  value.  This  definition 
appears  to  me  unobjectionable  for  one  so  concise.  It 
is  compact,  yet  sufficiently  precise  for  ordinary  purposes. 
But  when  an  individual  inquirer  attempts  to  shed  ad- 
ditional light  on  a  scientific  subject — when  he  ventures 
to  submit  his  peculiar  views  to  public  inspection,  in  the 
hope  of  impressing  on  the  minds  of  others  the  convictions 
which  rest  upon  his  own — it  is  alike  customary  and  use- 
ful for  him,  at  the  outset,  to  mark  with  clearness  and 
precision  the  boundaries  within  which  his  speculations 
will  be  found. 

To  the  end  that  I  may  do  this  in  a  manner  that  will 
be  perfectly  intelligible  to  the  reader,  I  will  first  ask  him 
to  join  me  in  a  bird's-eye  view  of  the  entire  domain  of 
human  knowledge.  By  this  means  we  shall  see  not  only 
the  position  and  limits  of  the  small  section  of  knowledge 
that  I  am  about  to  explore  and  hope  to  enlarge,  but  its 
relations  to  neighboring  sections  with  which  its  principles 
are  more  or  less  interlinked. 
1* 


INTRODUCTION. 


Knowledge  is,  perceived  and   comprehended   truth — 
truth  revealed  to  the  understanding — ascertained  truth. 
But  what  is  truth  ?     Those  who  are  deeply  versed  in  the 
origin  and  meaning  of  words,  and  in  the  philosophy  of 
language,  have  answered,  that,  in  the  scientific  sense,  this 
term  merely  denotes  the  distinguishing  attribute  of  one 
class  of  propositions  or  assertions,  as  falsehood  does  that 
of  another.     In  Mill's  system  of  logic,  for  example,  it 
is  maintained  that  all  truth,  and  all  error,  lie  in  proposi- 
tions ;  that  there  is  no  such  substantive  thing  as  truth, 
but  merely  such  a  quality  as  the  true,    and  that  this  is 
exclusively  confined  to  one  class  of  propositions,  or  asser- 
tions and  denials.     Now,  although  this  view  of  the  sub- 
ject is  presented  by  one  who   ranks   deservedly  high  in 
letters  and  philosophy,  yet,   I  cannot   but   regard  it  as 
unsound  and  untenable.     No  such  thing  as  Truth !  How 
then,  I  would  ask,   can  there   be   in   propositions,    such 
qualities  as  the  true  and  the  false  ?     Why  has  the  con- 
crete name  truth,  been  coined,    as  well  as  the  abstract 
name,  trueness,  unless  the  thing  exists  corresponding 
with  the  former  ?     With  what  propriety  could  we  speak 
of  warmness,  or  of  a  warm  object,  if  no  such  thing  as 
caloric  existed?      These   and   similar   questions   which 
might  be  put,  cannot,  I  apprehend,    receive  satisfactory 
answers  without  first  admitting  the  substantive  existence 
of  Truth.     As  a  portion  of  the  Universe,    it  is  too   im- 
portant and  all-pervading  to  be  confined  within  the  nar- 
row limits  of  one  class   of  propositions.     It  would  be 
much  nearer  its  real  character,  as  it  seems  to  me,  to  call 
it  the  essential   portion  of  all  things.     The  votaries  of 
philosophy  and  science  have,   in  all  ages,   characterised 
their  own  labors  as  efforts  to  ascertain  truth  ;  and  surely 
they  did  not  mean  to  admit,  much  less  assert,  that  they 
were  pursuing   a   nonentity ;  nor  are  they  liable  to  the 


INTRODUCTION.  8 

charge  of  having  committed  so  great  an  absurdity. 
Every  particle  of  our  knowledge  concurs  in  giving  un- 
mistakable evidence  that  Truth  is  a  real  existence, 
since  these  particles  of  knowledge  are  nothing  less  than 
sections  of  truth  impressed  upon  our  minds, — nothing 
less,  indeed,  than  witnesses  testifying  to  the  fact  of  their 
own  existence  and  presence.  Universal  Truth  we  may 
regard  as  divided  into  two  regions,  one  of  which  is  termed 
Knowledge,  the  other  Ignorance,  or  the  known  and  the 
unknown.  Now  our  existing  stock  of  knowledge  can  be 
nothing  else  than  that  portion  of  truth  which  has  been 
revealed  to  the  human  mind  ;  and  it  has  ever  been  the 
aim  of  scientific  inquirers  to  enlarge  its  boundaries  by 
rolling  back  the  dark  mantle  which  separates  the  regions 
of  the  known  from  the  unknown.  They  trace  up  a  given 
line  of  truth  to  the  point  where  earlier  explorers  had 
left  off,  and  then,  summoning  to  their  aid  every  instru- 
mentality at  their  command,  push  back  the  curtain  which 
conceals  its  hidden  links  ;  and  the  moment  these  are  ex- 
posed to  the  mental  vision  their  image  is  impressed  on 
the  mind,  which,  in  its  tarn,  strikes  off  a  duplicate  in  the 
form  of  propositions,  where  the  image  may  be  seen,  and 
its  counterpart  impressed  on  an  indefinite  number  of 
other  minds.  The  reason,  therefore,  why  some  proposi- 
tions are  called  true,  is,  because  they  are  counterparts 
of  truth  ;  i.  e.,  they  embody,  and  represent  to  the  mind, 
the  image  or  likeness  of .  facts,  or  portions  of  truth. 
Other  propositions  are  called  false  because  that  image 
is  absent. 

1  he  latest  philosophical  classification  of  things  is  the 
following :  1,  Feelings  ;  2,  Minds ;  3,  Bodies  5  4,  At- 
tributes. It  is  held  that  every  namable  thing  may  be 
grouped  under  one  or  other  of  these  heads — indeed,  some 
metaphysicians,  rejecting  the  fourth  class  as  superfluous 


4  INTRODUCTION. 

and  improper,  hold  that  the  first  three  fairly  include  all 
things.  Now,  it  is  apparent  that  Truth  cannot  be 
classed  under  either  the  first  or. the  second  head;  nor 
can  it,  with  any  degree  of  propriety,  be  called  a  Body, 
since  in  the  usual  acceptation  of  the  term,  a  body  con- 
sists of  matter — or  rather,  it  is  a  thing  so  far  material 
as  to  come  under  the  cognizance  of  one  or  more  of  the 
external  senses.  Finding  no  place  for  Truth  in  either 
of  these  general  classes,  logicians  shove  it  aside,  calling 
it  an  attribute,  and  after  appropriating  it  to  one  class  of 
propositions,  deny  that  it  exists  anywhere  else.  They 
seem  to  have  forgotten  that  we  have  an  internal  sense, 
competent  to  take  cognizance  of  things  of  which  the  ex- 
ternal senses  are  utterly  incapable.  The  immateriality 
of  truth  is  too  absolute  to  make  any  impression  on 
the  latter,  but  this  is  the  very  quality  which  fits  it  for 
assimilating  with  the  mind,  and  thus  impressing  our  con- 
sciousness. For  example,  that  immaterial  force  (termed 
Gravity)  which  binds  the  universe  together,  still  remains 
occult  to  the  outward  senses,  although  the  mind  has  been 
familiar  with  the  fact  of  its  existence  for  centuries.  In 
making  that  discovery,  the  senses  did  nothing  more  than 
to  point  out  certain  phenomena,  which  were  the  effects 
of  some  hidden  cause  or  agency  ;  but  with  this  hint,  or- 
dinary minds  were  able  to  perceive  the  existence  of  the 
agent  itself,  while  the  comprehensive  mind  of  Newton 
was  able  to  trace  it  up  to  other  worlds,  and  to  demon- 
strate its  universality.  Gravity,  therefore,  is  an  exist- 
ence, but  it  is  neither  a  Feeling,  a  Mind,  nor  a  Body. 
What  then  is  it  ?  I  answer  that  it  is  a  Law  of  Nature, 
and  that  it  belongs  to  a  class  of  namable  things  which 
philosophers  have  altogether  omitted  in  their  categories  : 
namely,  Facts  or  Principles,  or  in  the  concrete.  Truth. 


INTRODUCTION.  5 

It  will  be  seen  from  what  precedes,  that  I  regard  the 
term  Truth  in  its  widest  sense,  as  denoting  that  class  of 
things  which  consists  of  the  Laws  of  Nature  and  their 
derivatives,  including  all  the  principles  and  facts  result- 
ing from  them.  If  this  view  of  the  matter  be  a  correct 
one,  then  that  which  the  term  denotes  is  neither  more 
nor  less  than  the  omnipresence  of  the  Deity,  or,  in  other 
words,  the  external  manifestations  of  the  Author  of  na- 
ture in  His  works,  of  which  the  everywhere  present  and 
controlling  power  of  the  sun  within  our  solar  system  is  a 
faint  emblem. 

Such  is  Truth,  according  to  the  conceptions  I  have 
formed  of  it ;  and  in  evidence  of  the  correctness  of  this 
view  of  the  subject,  it  may  be  remarked,  that  if  we  knew 
all  the  laws  of  nature  and  their  derivatives,  we  should 
be  omniscient.  It  is  well  known,  however,  that  it  has 
not  pleased  the  Creative  Power  to  endow  humanity  with 
an  unlimited  capacity  for  the  perception  and  comprehen- 
sion of  these  laws.  The  powers  of  the  human  mind,  al- 
though exceedingly  elastic,  and  gifted  with  a  wide  range 
of  action,  are,  nevertheless,  finite.  They  can  take  cogni- 
zance of  only  such  laws  of  nature  as  happen  to  be  within 
their  ordained  sphere  of  action,  and  of  these  only  such  sec- 
tions as  are  found  to  correspond  with  them  in  magnitude, 
character,  and  attributes.  It  is  well  known,  for  instance, 
that  whenever  we  attempt  to  trace  a  line  of  truth  or  law 
of  nature,  either  up  to  its  original  source,  or  down  to  its 
ultimate  subdivisions,  we  are  alike  bewildered  by  the 
vastness  of  the  one,  and  by  the  minuteness  of  the  others. 
And  it  may  well  be  that  there  are  laws  of  nature  or  sec- 
tions of  truth  which  differ  so  completely  in  quality  and 
character  from  the  human  mind,  that  the  latter  is  not 
only  incapable  of  perceiving  and  comprehending  them, 
but  even  of  conceiving  them  to  exist. 


6  INTRODUCTION. 

After  this  preamble,  in  explanation  of  the  nature  of 
truth,  it  will  not  be  difficult  to  mark  out  the  boundaries 
of  that  division  of  it,  which,  by  having  its  image  impress- 
ed on  the  understanding  of  mankind,  has  been  converted 
into  knowledge.  This  division  is  capable  of  being  made 
co-extensive  with  the  domain  of  thought,  but  at  present 
it  is  much  smaller. 

The  aggregate  of  knowledge  has  been,  with  apparent 
propriety,  divided  into  the  following  classes  :  1,  A  know- 
ledge of  the  laws  which  link  together  causes  and  their  con- 
sequents, including  all  the  principles  and  facts  connected 
with  the  succession  of  phenomena  ;  2,  of  the  facts,  prin- 
ciples and  laws  which  relate  to  co-existences  ;  3,  of  those 
which  relate  to  simple  existences  ;  4,  of  such  as  relate 
to  resemblances.  To  these  is  added  a  distinct  but 
subordinate  class,  consisting  of  a  knowledge  of  such  facts 
as  are  involved  in  verbal  propositions  and  relate  to  the 
meaning  of  words. 

Under  one  or  other  of  the  foregoing  heads  may  be 
grouped  every  matter-of-fact  with  which  the  human  mind 
is  acquainted,  or  of  which  it  is  competent  to  take  cogni- 
zance. The  class  first  named  greatly  exceeds,  both  in 
extent  and  in  importance,  all  the  others  combined  ;  and 
since  it  is  the  division  within  which  will  be  found  the 
small  section  of  knowledge  that  we  are  about  to  explore, 
it  is  not  deemed  necessary  on  the  present  occasion  to 
characterise  the  others  more  definitely.  But  this  I  will 
proceed  to  define  with  more  exactness,  preparatory  to 
noting  some  of  its  subdivisions. 

The  soundest  thinkers  of  the  present  day  regard  the 
law  of  Causation  as  of  universal  prevalence.  All  their 
scientific  speculations  are  based  on  the  assumption,  that 
every  event  which  takes  place  in  nature,  whether  connected 
with  matter  or  with  mind,  is  the  effect  of  some  antece- 


INTRODUCTION.  7 

dent  cause  or  combination  of  causes  ;  as,  for  example,  the 
phenomenon,  day,  is  the  effect  of  sunbeams,  the  phenome- 
non, motion,  that  of  gravity  or  momentum,  or  of  these  two 
causes  acting  jointly.  Some  have  denied,  and  indeed 
still  deny,  the  universality  of  this  law.  They  admit  its 
invariable  prevalence  in  the  material  world,  but  deny  its 
agency  in  the  production  of  mental  phenomena.  It  will 
be  incumbent  on  me,  in  the  ensuing  chapters,  to  demon- 
strate the  unsoundness  of  this  opinion,  so  far  as  it  relates 
to  mental  volitions  connected  with  wealth  ;  and  if  I  suc- 
ceed in  this,  we  may  safely  conclude  that  they  are  also 
wrong  as  to  all  other  phenomena  of  mind.  Indeed,  it 
must  be  apparent  to  any  one  who  has  given  the  subject 
much  reflection,  that  no  such  thing  as  a  well  grounded 
science  of  society  can  be  constructed  without  assuming 
as  its  basis,  not  only  the  existence  of  this  law,  but  its 
controlling  influence  over  mind  as  well  as  over  matter. 

Assuming  these  views  to  be  correct,  it  thence  follows 
that  the  department  of  knowledge  under  consideration, 
occupies  a  wide  space — that  it  extends,  in  fact,  over  the 
entire  domain  of  ascertained  truth,  but  is  confined  to  one 
class  of  laws  exclusively.  It  takes  cognizance  of  all 
causes  and  all  consequences  which  the  human  mind  is  ca- 
pable of  understanding,  but  it  takes  no  note  of  the  facts 
involved  in  the  simple  existence,  the  co-existence,  or  the 
resemblance  of  things,  nor  of  the  meaning  of  words, 
except  so  far  as  may  be  necessary  as  a  subsidiary 
means  of  attaining  the  end  in  view.  In  truth,  we 
may  regard  each  division  of  knowledge  as  present- 
ing this  widely  extended  surface,  but  while  the  others 
only  contain  here  and  there  an  insulated  fact  or  prin- 
ciple of  subordinate  importance,  this  is  literally  filled 
with  interdependent  lines  of  truth,  to  which  time  is 
constantly  adding  new  branches,  and  to  each  branch 


8  INTRODUCTION. 

new  links.  When,  from  any  chosen  point  of  obser- 
vation, these  lines  are  traced  upward,  they  are  found 
not  only  to  converge,  but  at  almost  every  link  to  con- 
join, so  that  the  nearer  their  source  the  fewer  their  num- 
ber. As  to  what  may  be  their  character  and  tendencies, 
in  either  their  ascending  or  descending  series,  where 
they  pass  beyond  the  present  boundaries  of  human 
knowledge,  we  can  of  course  only  conjecture  ;  but  so  far 
as  analagous  reasoning  warrants,  we  have  a  right  to  in- 
fer that  the  same  system  prevails  in  the  regions  of  the 
unknown  ;  and  hence,  that,  originating  in  the  impulses 
of  the  Great  First  Cause,  the  law  of  causation  issues 
thence  in  a  single  stream,  which,  at  every  remo.ve  from 
its  source,  diverges  and  divides  like  pencils  of  light  until 
the  universe  is  filled  with  its  innumerable  branches. 

This  greatest  of  the  four  primary  classes  of  knowledge 
is  subdivided  into  numerous  sections  or  fields,  called  sci- 
ences. It  would  be  foreign  to  the  aim  of  this  prelimi- 
nary chapter  to  detain  the  reader  with  an  attempted  de- 
finition of  the  boundaries  of  each  of  these  fields,  or  even 
with  a  simple  enumeration  of  the  whole  of  them.  It  will 
be  sufficient  for  my  purpose  to  characterise,  briefly,  a 
few  of  the  more  important,  together  with  those  which 
border  on  Political  Economy. 

I  shall  begin  with  the  most  elevated  fields,  or  those 
which  lie  nearest  the  superior  boundary  of  knowledge, 
where  the  lines  of  causation  first  enter  in  from  the  re- 
gions of  the  unknown,  and  consequently,  are  fewest  in 
number,  but  greatest  in  magnitude — containing,  as  it 
were,  the  germs  from  which  are  developed  the  unnum- 
bered derivative  laws,  which  increase  in  geometrical  pro- 
gression as  they  pass  through  the  domain  of  thought  un- 
til their  ultimate  subdivisions  are  hid  behind  the  curtain 
that  forms  its  inferior  boundary.  The  first  is  called  As- 


INTRODUCTION.  9 

tronomy.  It  is  the  province  of  the  votaries  of  that  sci- 
ence to  investigate  and  unfold  the  natural  laws  which 
constitute  the  mechanism  of  the  heavens  and  control  the 
motions  of  the  bodies  of  space ;  and  we  see  them  still 
engaged  in  successful  efforts  to  roll  back  the  curtain  so 
as  to  penetrate  still  deeper  into  the  mysteries  of  the  uni- 
verse. The  second  in  position  and  magnitude,  though 
not  in  importance,  is  termed  Geology,  within  which,  lie 
the  laws  concerned  in  the  formation  of  the  earth,  espe- 
cially its  superior  strata  and  surface.  Next,  Meteorology, 
which  takes  cognizance  of  laws  appertaining  to  the  at- 
mosphere. Next,  Chemistry,  which  traces  out  the  laws 
concerned  in  the  composition  of  all  material  substances. 
Next,  Physiology,  which  attempts  to  ascertain  the  laws 
concerned  in  the  phenomena  of  organic  existence  or  life. 
Next,  Psychology,  which  investigates  the  laws  of  mind. 
But-  if,  as  is  now  most  common,  the  two  sciences  last 
named  be  so  circumscribed  in  their  definitions  as  to  ex- 
clude from  their  province  all  kinds  of  organic  existence 
except  that  of  man,  then  they  should  be  preceded  by  the 
science  of  Human  Nature,  since  this  field  includes  both 
of  the  others. 

To  come  down,  then,  to  the  limited  province  wherein 
man  is  the  only  subject  or  phenomenon  presented  for  con- 
templation, we  begin  with  the  science  of  Human  Nature, 
the  votaries  of  which  thread  out  the  laws  concerned  in 
his  existence  and  constitution,  whether  connected  with 
his  corporeal  attributes  or  his  mental.  Next,  Ethology, 
which  investigates  the  laws  concerned  in  the  formation  of 
character.  Next,  the  Science  of  Society,  which  traces 
out  the  laws  concerned  in  the  production  of  all  social 
phenomena  of  whatever  kind  or  tendency.  Next,  Poli- 
tics, or  the  Science  and  Art  of  Government.  This  is  a 
division  of  the  field  last  named.  As  a  science,  politics 
2 


10  INTRODUCTION. 

merely  takes  note  of  the  natural  laws  concerned  in  the 
production  of  that  class  of  social  phenomena  over  which 
the  prerogative  of  government  may  be  usefully  extend- 
ed :  as  an  art,  it  frames  and  enforces  the  machinery  of 
government — so  executing  its  task  as  to  conform  to  the 
plan  which  science  indicates  as  the  one  best  calculated, 
to  suppress  social  evils  and  to  produce  social  benefits. 

Now,  it  is  within  a  small  section  of  the  political  de- 
partment of  social  science  that  the  very  limited  theatre 
of  our  explorations  will  be  found.  While  the  general 
science  of  society  takes  cognizance  of  all  the  causal  laws 
that  affect  the  social  interests  of  mankind,  and  while 
the  science  of  politics  takes  note  of  all  those  which  in 
any  manner  affect  the  interests  of  the  state — Political 
Economy  is  concerned  only  with  that  portion  of  them 
which  give  birth  to  and  result  from  the  desire  of 
Wealth. 

Viewed  in  this  aspect,  and  from  a  position  which  ena- 
bles  us  to  take  a  perspective  survey  of  the  entire  domain 
of  knowledge,  the  science  of  wealth  appears  to  be  but  a 
mere  point  scarcely  large  enough  to  be  perceived.  Like 
everything  else,  however,  the  nearer  we  approach  it  the 
larger  it  will  appear  ;  and  when,  upon  entering  the  gate 
that  opens  to  its  province,  we  attempt  to  trace  out  the 
consequences  of  that  law  of  human  nature  which  begets 
in  all  mankind  the  desire  of  wealth,  we  find  so  many  de- 
rivative laws  branching  off,  and  these  branches  subdivi- 
ding in  such  rapid  progression,  that  the  powers  of  the  in- 
tellect are  not  equal  to  the  effort  of  tracing  out  the  whole 
of  their  consequences.  In  fact,  these  principles  are  so 
numerous  and  important,  they  occupy  a  field  so  vast,  and 
exercise  such  a  potent  influence  on  human  happiness  and 
progress,  that  it  has  been  deemed  advisable  to  facilitate 
their  exposition  by  dividing  this  scientific  field  into  nu- 


INTRODUCTION.  11 

merous  sections.  Accordingly,  Political  Economy  traces 
this  law  of  human  nature  and  its  derivatives  no  farther 
than  they  affect  the  pecuniary  interests  of  mankind  in 
their  capacity  of  political  communities  or  states.  Here 
it  leaves  them.  They  then  pass  through  into  numerous 
other  sections  of  the  same  field,  some  of  which  are  term- 
ed sciences,  others  arts — such,  for  example,  as  Agricul- 
ture, Manufactures,  Navigation,  and,  in  short,  the  whole 
circle  of  useful  arts  and  sciences. 

Having  thus,  in  general  terms,  pointed  out  the  posi- 
tion and  character  of  our  field  of  inquiry,  as  well  as  its 
relations  to  other  sciences,  I  will  now  proceed  to  give  a 
more  exact  definition  of  it. 

Political  Economy,  then,  I  regard  as  the  science  whose 
peculiar  province  it  is  :  1,  To  unfold  the  law  or  laws  of 
human  nature  from  which  the  desire  of  wealth  emanates : 
2,  To  explain  the  nature  and  attributes  of  the  resulting 
phenomenon,  Wealth — or  more  properly,  Value :  3,  To 
point  out  the  prime  agents  of  its  production,  together 
with  the  manner  in  which  their  respective  services  con- 
cur in  the  process  :  4,  To  ascertain  and  describe  the  so- 
cial machinery  that  political  communities  have  de- 
vised and  adopted,  as  general  auxiliary  agents  of  pro- 
duction :  And  5 — after  ascertaining  these  fundamental 
truths,  which  may  be  regarded  as  the  groundwork  of  the 
science — to  trace  out  the  resulting  principles  or  natural 
laws  which  govern  the  production,  distribution  and  con- 
sumption of  social  wealth.  Thus  far  the  province  of  Po- 
litical Economy  is  purely  scientific — it  is  confined  to  the 
investigation  of  principles — and  the  above  definition  of 
it,  indicates  the  limits  within  which  the  first  division  of 
this  inquiry  will  be  confined.  But  after  science  has  un- 
folded the  laws  and  principles  from  which  wealth  results, 
and  those  to  which  it  gives  birth,  it  is  also  the  province 


12  INTRODUCTION. 

of  Political  Economy  to  point  out  their  proper  application, 
by  indicating  the  true  economic  polity  of  governments. 
The  second  division  of  this  inquiry  will  be  an  attempt  to 
execute  a  part  of  that  task. 

The  foregoing  definition  needs  some  modification.  It 
will  be  seen  that  it  seems  to  shut  out  of  our  field  of  in- 
quiry, every  law  of  human  nature  save  that  which 
prompts  us  to  prefer  a  greater  to  a  less  amount  of  wealth. 
In  strictness  it  should  do  so,  because  all  other  laws  of 
human  nature  properly  belong  to  other  departments  of 
scientific  inquiry  ;  but  since  they  are  all  linked  together 
by  a  chain  of  interdependence,  we  shall  not  be  able  to 
ascertain  the  true  origin  of  wealth  without  first  deter- 
mining their  joint  tendency,  or  rather,  their  joint  influ- 
ence on  the  desire  of  wealth.  It  will  be  found  also,  as 
we  proceed,  that  the  interdependence  referred  to  is  so 
complete,  and  so  uniformly  manifested  in  social  phenom- 
ena, that  we  shall  have  frequent  occasion  to  step  over 
the  lines  which  divide  Political  Economy  from  the  collat- 
eral departments  of  social  science,  for  the  purpose  of  ex- 
aming  other  laws  of  human  nature  and  their  derivatives, 
with  the  view  of  estimating  their  influence  on  kindred  prin- 
ciples with  which  we  are  directly  concerned.  We  shall 
find,  for  example,  that  the  law  of  self-preservation  (which 
may  be  regarded  as  the  fundamental  principle  of  politi- 
cal science,  of  which  field  this  is  but  a  small  section,)  not 
only  concurs  with  other  causes  in  producing  the  desire  of 
wealth,  but  that  it  has  given  birth  to  that  feature  of  the 
Social  Contract  which  forbids,  and  in  a  large  degree  pre- 
vents, the  commission  of  murder,  as  well  as  all  other  acts 
of  personal  violence  calculated  to  mar  the  productive  ca- 
pabilities of  mankind ;  and  that  it  has  thus  contributed 
essentially  to  the  development  of  wealth.  So,  also,  with 
most  of  the  other  laws  of  human  nature  and  their  result- 


INTRODUCTION.  18 

ing  desires  :  they  all  concur,  incidentally,  either  in  pro- 
moting the  production  and  preservation  of  wealth,  or  in 
hastening  its  consumption.  It  may,  therefore,  be  found 
useful,  in  the  progress  of  this  inquiry,  to  characterise 
briefly  the  whole  family  of  mental  desires,  for  the  pur- 
pose of  indicating  the  pecuniary  consequences  to  which 
they  lead  ;  but  whenever  I  find  it  necessary  to  trespass 
on  other  fields  of  inquiry,  I  shall  be  careful  to  confine 
my  researches  therein,  to  an  examination  of  such  facts 
and  principles  as  exert  an  influence  on  either  the  pro- 
duction, the  distribution,  or  the  consumption  of  wealth. 

Beside  these  links  which  connect  Political  Economy 
with  the  superior  and  the  collateral  departments  of  so- 
cial science,  there  are  others  which  connect  it  with  those 
branches  of  science  and  art  which  lie  below  it  and  in 
some  measure  result  from  it — such  as  agriculture  and 
navigation,  the  manufacturing  and  mechanic  arts,  the  art 
of  individual  and  household  economy,  &c.  But  as  it  re- 
spects these,  the  line  of  demarcation  is  so  distinct,  and 
the  reciprocal  influences  so  slight,  that  we  shall  rarely 
find  it  necessary  to  extend  our  researches  into  their 
rightful  province.  Their  principles  being  derivatives  of 
those  embraced  in  our  science,  the  only  way  in  which 
they  can  modify  the  latter  is  by  reacting  on  their  source, 
which,  it  is  evident,  must  be  to  a  much  smaller  extent 
than  where  the  influence  is  direct,  as  is  the  case  in  the 
other  instances  to  which  I  have  referred. 

To  this  delineation  of  what  may  be  termed  the  exter- 
nal relations  of  Political  Economy,  I  might  add  a  more 
detailed  enumeration  than  I  have  yet  given  of  the  truths 
that  lie  within  its  own  province.  For  the  present,  how- 
ever, I  shall  refrain  from  doing  so.  In  the  definition  al- 
ready presented,  I  have  named  the  cardinal  principles 
from  which  all  the  other  truths  of  the  science  are  derived ; 
2* 


14  INTRODUCTION. 

and  since  the  ensuing  inquiry  is  specially  designed 
to  unfold  them,  by  legitimate  deductions  from  well  es- 
tablished principles  and  premises,  it  appears  to  me  their 
enunciation  may  be  more  properly  left  to  the  body  of 
the  work. 

These  general  remarks  will,  it  is  hoped,  enable  the 
reader  to  understand  my  design,  and  with  his  consent  we 
will  now  enter  upon  the  field  of  inquiry  so  imperfectly 
marked  out. 


PART  I. 
OF  THE  SCIENCE  OF  WEALTH. 

CHAPTER     1« 

OP  THE  ORIGIN  OF  WEALTH. 

IN  considering  the  plan  of  this  work,  I  have  found  it 
somewhat  difficult  to  determine  whether  to  commence 
with  an  analysis  of  the  nature  of  wealth,  or  with  an  ex- 
position of  the  natural  laws  concerned  in  its  origin.  Both 
seem  equally  entitled  to  precedence,  since  we  cannot 
present  either  one  without  supposing  in  the  mind  of  the 
reader  a  pre-existing  knowledge  of  the  other.  One  or 
the  other,  however,  must  have  the  first  hearing ;  and, 
since  a  knowledge  of  the  causes  which  brought  wealth 
into  being  will  greatly  facilitate  our  apprehension  of  its 
nature,  I  have  concluded  to  treat  first  of  its  origin.  But 
before  doing  so,  it  will  be  well  to  explain,  briefly,  the 
sense  in  which  the  terms,  wealth  and  value,  are  here 
employed. 

The  term  Wealth,  or  Social  Wealth,  I  regard  as  the 
general  name  of  that  class  of  things  which  possess  the 
attribute,  value  ;  and  Value  I  conveive  to  be  that 
property  of  things,  which  prevents  their  obtainment 
unless  other  things  possessing  the  same  property  be 
given  in  exchange  for  them.  This  attribute  is  some- 


16  ORIGIN    OF    WEALTH.  PART  I. 

times  called  exchangeable  value,  but  I  hold  the  adjective 
to  be  unnecessary. — Value,  then,  in  the  sense  in  which 
the  term  is  used  in  this  treatise,  may  be  regarded  as  the 
vital  principle  or  essential  portion  of  social  wealth,  a 
more  expressive  name  for  which  would  be,  Artificial 
Utility ;  because  (as  I  shall  endeavor  to  prove  in  the 
next  chapter,)  that  property  of  things  which  we  term 
value,  is,  in  fact,  neither  more  nor  less  than  the  utility 
wherewith  they  have  been  invested  by  artificial  means. 

Aided  by  this  brief  definition  of  the  terms  employed, 
the  reader  will  be  prepared  to  follow  me  in  the  effort  to 
point  out  the  origin  of  wealth,  and  the  ends  it  was  de- 
signed to  aid  in  attaining.  To  these  his  attention  is  now 
invited. 

In  contemplating  the  nature  of  man  and  the  circum- 
stances which  surround  him,  we  discover  the  important 
fact,  that  his  wants  and  desires  are  ever  in  advance  of 
the  means  at  his  command  for  satisfying  them ;  his  wants 
and  desires  are  infinite,  the  means  at  his  command  for 
satisfying  them,  finite.  This  principle  is  so  universal 
and  invariable,  its  manifestation  in  the  life  of  every  in- 
dividual is  so  certain  and  constant,  that  we  are  warranted 
in  calling  it  an  unavoidable  condition  of  human  life, — 
a  fundamental  law  of  human  nature. 

These  wants  and  desires  are  not  only  infinite  in  num- 
ber, but  ever  recurring ;  to  quiet  their  importunity  re- 
quires the  constant  presence  of  their  objects.  They  are 
of  various  degrees  of  intensity,  being  so  arranged  that 
they  may  be  said  to  environ  each  individual  in  a  countless 
number  of  receding  circles,  the  intensity  of  which  is  in 
proportion  to  their  nearness  to  the  centre,  and  their 
volume  in  proportion  to  their  distance  from  it ; — that  is 
to  say,  the  wants  constituting  the  first  or  inner  circle 
are  more  urgent  but  less  numerous  than  those  of  the 


CHAP.  I.  ORIGIN    OF    WEALTH.  IT 

second,  the  second  than  the  third,  and  so  on  as  they  re- 
cede ;  from  which  it  may  be  inferred  that  each  circle 
represents  about  the  same  aggregate  of  wants  and  desires. 
Fortunately,  we  are  not  subject  to  the  pressing  importu- 
nity of  more  than  one  of  these  circles  at  a  time,  because 
the  nearest  forms  a  barrier  which  effectually  prevents 
the  approach  of  all  the  others.  But  whenever  that  is 
removed  by  the  presence  of  its  objects,  the  next  outer 
circle  immediately  concentrates  and  occupies  its  place. 
The  same  may  be  said  of  the  next,  and  the  next ;  and 
so  on  to  infinity,  for  no  man  has  ever  yet  succeeded  in 
finding  the  outermost  limits  of  his  wants  and  desires. 

Created  subject  to  these  boundless  and  ever  recurring 
wants  and  desires,  man  finds  himself  placed  upon  a 
theatre  of  existence  where  but  a  very  limited  number  of 
their  immediate  objects  are  placed  within  his  reach  ; 
not  sufficient  even  to  sustain  his  vitality.  He  finds 
however,  that  nature  presents  to  him  a  profusion  of  ele- 
ments and  proximate  compounds,  adapted  to  the  forma- 
tion of  finished  objects  of  desire  ;  and  he  finds  moreover, 
that  his  Creator  has  conferred  on  him  suitable,  though 
limited,  mental  and  muscular  powers  for  making  the 
needful  modifications. 

Such  are  the  means  provided  by  nature  for  procuring 
the  objects  of  human  desire,  from  which  we  may  readily 
perceive  that  the  end  cannot  be  accomplished  unless  man- 
kind exercise  the  faculties  wherewith  they  are  endowed. 
But  if  we  contemplate  for  a  moment  the  constitution  of 
the  human  mind,  and  the  nature  and  arrangement  of  our 
wants  and  desires,  we  shall  find  that  the  whole  are  ad- 
mirably designed  for  securing  this  exercise. 

Without  entering  the  debatable  portion  of  the  .field  of 
mental  science — without  adopting  principles  controverted 
by  any  philosophical  sect — it  may  be  assumed:  1,  That 


18  ORIGIN    OF    WEALTH.  PART  I. 

Intellect,  or  that  faculty  of  the  mind  which  performs  the 
office  of  reasoning  and  judging,  is  the  highest  endowment 
of  man,  the  governing  principle  of  his  nature ;  and  that 
Happiness  is  the  supreme  desire  of  his  heart — all  other 
desires  being  merely  its  subordinate  auxiliaries :  2,  That 
the  intellect  controls  and  directs  the  desire  of  happiness, 
and  through  that,  its  subordinates  ;  from  which  rule,  how- 
ever, must  be  excepted,  those  instances  wherein  the  pros- 
pect of  immediate  pleasure  renders  desires  so  vehement 
that  they  are  led  to  commit  acts  of  insubordination  ;  but 
for  these  acts  they  are  promptly  punished  by  the  intellect, 
through  its  instrument,  the  conscience  :  3,  That  the  desire 
of  happiness,  under  the  guidance  of  the  intellect  or  judg- 
ment, not  only  regulates  the  intensity  of  all  other  de- 
sires, but  prompts  and  directs  every  action  of  the  life  :  4, 
That  happiness  is  promoted  (really ,  when  the  judgment 
is  true  and  its  dictates  obeyed — seemingly,  when  it  is 
false  or  disobeyed,)  by  the  satisfaction  of  wants  and  gra- 
tification of  desires. — These  propositions  we  may  have 
frequent  occasion  to  refer  to  as  premises  ;  but  at  present 
we  have  only  to  notice  a  very  obvious  inference  that  may 
be  drawn  from  them,  and  the  truth  of  which  is  fully  con- 
firmed by  observation  and  experience  ;  namely,  that 
whether  the  intellect  be  enlightened  or  ignorant,  the  de- 
sires obedient  or  disobedient,  man  is  impelled,  alike  by 
the  dictates  of  his  judgment  and  by  the  joint  urgency  of 
his  supreme  desire  and  all  its  subordinates,  to  exercise 
his  faculties  in  procurement  of  objects  adapted  to  his 
wants  and  desires. 

Such  is  a  brief  outline  of  the  plan  of  human  life  as  es- 
tablished by  its  Author.  It  remained  for  man  himself 
to  carry  it  out  by  performing  Ins  appointed  part.  Let 
us  now  look  at  the  nature  and  extent  of  the  powers  con- 
ferred upon  him  for  that  purpose,  and  at  the  character 


CHAP  I.  ORIGIN   OF    WEALTH.  19 

of  some  of  the  wants  and  desires  which   importune  him 
for  their  objects. 

These  powers  may  be  divided  into  two  classes,  intel- 
lectual and  corporeal.  The  first  plans  and  directs,  the 
second  executes.  I  will  endeavor  to  give  an  outline  of 
the  process.  To  do  this  with  precision  and  clearness 
would  require  a  more  perfect  knowledge  of  the  men- 
tal organism  and  functions  than  the  science  of  mind  has 
yet  unfolded,  unless  we  adopt  as  the  true  theory,  the  hy- 
pothesus  of  Gall  and  his  followers.  That  would  indeed 
remove  all  difficulties,  for  this  school  of  mental  philoso- 
phers profess  not  only  to  have  ascertained  the  nature  and 
purpose  of  the  different  organs  of  the  mind,  but  to  be 
able  to  measure  the  size  and  strength  of  each  in  any 
given  individual.  But  however  much  of  truth  there  may 
be  in  these  pretensions,  we  know  that  Phrenology  is  re- 
garded by  many  sound  thinkers  as  too  uncertain  in  its 
premises,  as  well  as  in  its  conclusions,  to  establish  its 
claims  to  the  title  of  a  science  ;  and  hence,  its  materials 
are  altogether  unfit  to  be  used  in  forming  a  basis  on 
which  to  build  another  science.  It  is  not,  however,  ab- 
solutely essential  that,  when  investigating  the  origin  of 
wealth,  we  should  be  able  to  lift  the  curtain  which  hides 
from  us  the  secret  machinery  of  mind,  and  thus  learn  the 
precise  source  from  which  the  intellectual  portion  of  it 
emanates.  The  ability  to  do  so,  and  its  resulting  know- 
ledge, would,  doubtless,  facilitate  our  labor  and  give  in- 
creased certainty  to  its  results  ;  but  in  their  absence,  we 
can  substitute  our  knowledge  of  mental  phenomena,  and 
thus  seize  hold  of  the  rudimental  principle  of  social 
wealth,  at  the  very  point  where  it  first  enters  the  boun- 
daries of  our  knowledge,  which  is  but  one  remove  from 
its  ultimate  source.  This,  then,  shall  be  our  starting 
point,  whence  we  will  reason  only  from  such  general 


20  ORIGIN    OF    WEALTH.  PART  1. 

principles  of  the  human  mind  as  are  universally  admitted 
to  be  true. 

As  man  has  been  constituted  by  nature,  we  find  that 
Mind  is  the  controlling  power  in  all  his  actions.  The 
Body  serves  as  its  tenement)  and  also,  as  an  obedient 
machine  wherewith  it  may  compass  its  volitions  and  aims. 
The  senses  are  placed  upon  this  machine  as  sentinels, 
which,  by  means  of  nerves  leading  from  the  brain  to  each 
organ,  and  from  each  organ  to  the  brain,  serve  to  con- 
nect the  mind  with  the  external  world  and  impart  to  it 
some  knowledge  of  every  thing  of  which  they  are  capa- 
ble of  taking  cognizance.  Intuition,  inference,  memory, 
voice,  and  motion,  are  also  instrumentalities  or  media  of 
the  mind,  provided  by  nature,  for  imparting  to  it  a 
knowledge  of  her  laws.  The  subordinate  desires  present 
their  petitions  to  the  desire  of  happiness  ;  the  desire  of 
happiness  refers  them  to  the  understanding  or  judgment, 
with  instructions  first  to  determine  which  it  is  possible  to 
gratify,  next,  to  decide  which  of  these  are  best  calculated 
to  promote  happiness,  and  finally  to  put  in  motion  the  ap- 
propriate machinery  for  executing  its  decision.  The  mind 
then  plans  and  issues  its  volition,  the  machine  moves  in 
obedience  to  the  mandate,  and  the  senses  and  other  in- 
strumentalities of  the  mind  direct.  Such  is  the  modus 
operandi  in  every  human  thought,  emotion  and  volition, 
when  they  result  in  action.  It  is  to  be  noticed,  however, 
that  the  body  cannot  execute  whatever  the  mind  chooses 
to  will.  The  compass  of  the  corporal  powers  is  much 
more  circumscribed  than  that  of  the  mental.  They  can- 
not fly  with  the  freedom  and  swiftness  of  thought,  nor 
can  they  accomplish  a  host  of  other  tasks  which  the  de- 
sire of  happiness  would  prompt  the  mind  to  impose  upon 
them,  provided  it  perceived  the  ability  to  perform. 


CHAP.   I.  ORIGIN    OF    WEALTH.  21 

Nature,  in  fashioning  this  machine,  endowed  it  with 
vitality  and  motion,  which  enable  it,  within  the  narrow 
compass  of  its  functions  and  powers,  to  obey  the  man- 
dates of  the  mind ;  but  she  at  the  same  time  kindled 
within  it  a  consuming  fire,  which,  unless  constantly  fed 
with  fresh  fuel,  in  the  form  of  wholesome  air,  water,  and 
food,  speedily  consumes  its  vital  organs.  Now,  inas- 
much as  it  is  a  well-known  law  of  human  nature  to  love 
life  and  dread  death,  it  follows  that  the  first  and  most 
imperative  mandate  which  the  mind  conveys  to  its  obedi- 
ent machine,  is,  that  it  procure  the  aliment  required  to 
keep  itself  in  motion,  to  the  end  that  the  vital  functions 
may  be  sustained,  and  the  life  thus  prolonged.  And  lest 
the  love  of  life,  and  the  mental  desire  for  physical  ali- 
ment to  which  it  gives  birth,  might  not  of  themselves  be 
sufficiently  strong  to  prompt  the  efforts  requisite  for  se- 
curing the  end  in  view,  nature  has  added  the  pleasurable 
sensations  which  attend  the  gratification  of  these  desires, 
and  the  pains  of  hunger,  thirst,  and  suffocation,  as  aux- 
iliary aids  to  the  mental  desire.  It  may  be  affirmed, 
therefore,  that  the  most  imperative  of  human  wants,  are 
those  having  for  their  objects,  air,  water  and  food.  They 
may  be  regarded  as  constituting  the  first  or  inner  circle 
of  those  by  which  we  are  individually  environed.  Our 
earthly  existence  is  made  to  depend  upon  a  uniform  sup- 
ply of  their  objects  ;  and  we  have  seen  that  the  love  of 
life,  the  dread  of  death,  the  enjoyments  of  appetite,  and 
the  pains  of  denial,  all  concur  in  urging  their  procure- 
ment. How,  then,  shall  they  be  obtained  ?  This  is  an 
important  inquiry,  and  one  which,  if  properly  pursued, 
cannot  fail  to  exhibit  the  true  origin  of  wealth. 

In  the  first  place,  it  may  be  set  down  as  an  axiom, 
that  man  obtains  all  his  aims  and  ends  by  the  best 
methods  within  his  knowledge  and  reach.  This  is  a 
3 


22  ORIGIN   OF    WEALTH.  PART  I, 

general  principle  of  the  human  mind,  of  such  universal 
prevalence,  that  humanity  scarcely  presents  an  isolated 
exception — so  uniform  and  ever  active,  that  we  see  man- 
kind, everywhere,  and  in  all  conditions  of  life,  engaged 
in  untiring  efforts  to  improve  the  methods  in  every 
process  required  to  supply  their  wants.  Guided  by  this 
unbending  law  of  the  mind,  let  us  endeavor  to  trace  out 
the  general  features  of  the  plan  adopted  by  mankind  for 
the  purpose  of  supplying  the  objects  required  by  the 
first  or  most  urgent  circle  of  human  wants. 

Atmospheric  air,  the  object  first  named,  is  a  free  gift 
of  nature  to  her  common  children.     All  living  creatures 
that  need  it,  may  partake  of  it  freely,  without  effort,  and 
without  diminishing  the  supply.  They  are  immersed  in  a 
sea  of  it,  and  have  but  to  permit  the  involuntary  expan- 
sion and  contraction  of  the  lungs,  and  that  want  is  sup- 
plied.    Water  is  furnished  by  nature  in  almost  equal 
profusion ;  no  effort  worthy  of  notice  is  required  to  pro- 
cure it.     Not  so,  howeyer,  with  the  various  kinds  of  food. 
,  These,  although  equally  indispensable  to  life,  have  been 
contributed  by  nature  with  a  more  sparing  hand.     To 
obtain  them,  even  of  the  simplest  form,  in  quantities 
sufficient  to  sustain  the  vital  functions,  requires   some 
exercise  of  the  faculties  wherewith  man  has  been  endow- 
ed by  his  Creator.     Nor  can  he  go  and  gather  them  at 
the  promptings  of  his  appetite  and  the  volitions  of  his 
mind,  especially  if  the  season  be  unpropitious  or  the 
locality  unfavourable.     True,  the   immediate  materials 
of  food  are  distributed  over  the  world  in  considerable 
(though  inadequate)  quantities,  at  least  during  a  part  of 
the  year,  while  their  elements  and  proximate  compounds 
are  supplied  by  nature  in  great  abundance ;   but  then, 
the  direct  powers  conferred  upon  man  for  transforming 
the   elementary  and  proximate  materials  into  finished 


CHAP.  I.  ORIGIN    OF   WEALTH.  23 

articles  of  food,  and  for  securing  them  and  preserving  a 
portion  for  use  in  a  season  of  scarcity,  are  found  to  be 
defective.  The  mind  has  sufficient  capacity  to  conceive 
and  direct,  but  the  body  has  not  the  needful  powers  of 
execution.  It  can  only,  as  we  have  said,  obey  the 
mental  volitions  when  they  direct  it  within  the  limits  of 
its  ordained  field  of  action,  and  this  has  been  found  so 
narrow  as  to  render  it  unequal  to  the  task  of  pro- 
curing the  quantity  of  food  required  to  support  life. 
Here,  then,  was  a  dilemma.  The  plan  of  human  life 
seemed  to  be  imperfect,  for  its  Author  had  not.  apparent- 
ly, furnished  means  sufficient  to  preserve  it.  The  im- 
perfection, however,  was  but  apparent,  not  real ;  for  the 
deficiency  of  direct,  immediate  means,  was  more  than  com- 
pensated for  by  the  rich  endowments  of  the  intellect.  The 
latter,  we  may  suppose,  had  no  sooner  discovered  the 
defective  capacity  of  the  machine  provided  by  nature  for 
executing  the  mental  volitions,  and  the  fatal  consequen- 
ces that  must  speedily  ensue  in  the  absence  of  a  remedy, 
than  it  commenced  the  task  of  contriving  one.  The 
crisis  was  important,  the  necessity  urgent,  and  the  con- 
sequences of  success  or  failure  of  the  most  momentous 
character,  for  the  question  of  the  perpetuation  or  extinc- 
tion of  the  human  race  was  involved  in  the  effort  and 
must  be  decided  by  the  issle.  The  intellectual  faculties, 
gifted,  as  they  seem  to  be,  with  powers  of  expansion 
proportionate  to  the  duties  required  of  them,  proved 
themselves  equal,  and  more  than  equal,  to  the  emer- 
gency. They  devised,  and  aided  by  the  corporeal 
powers,  created  Value,  which  they  brought  into  their 
service,  and  by  aid  of  which  they  were  enabled  not  only  to 
satisfy  the  desire  of  food,  but  to  procure  the  objects  of 
many  other  desires. 

The  nature  of  this  new  agent,  and  the  means  employed 
in  its  production  and  preservation,  will  be  fully  discuss- 


24  ORIGIN    OF    WEALTH.  PART  I. 

ed  in  the  next  chapter,  my  object  here  being  merely  to 
point  out  the  motive,  or  rather  the  necessity,  that  prompt- 
ed its  creation.  But  lest  my  meaning  prove  obscure,  it 
may  be  well  to  say  in  this  place,  that  value  is  the 
essential  principle  of  all  artificial  machines.  When 
mankind  discovered  that  the  direct  ways  and  means 
provided  them  by  nature  were  inadequate  to  the  preser- 
vation of  life,  we  may  well  suppose  that  they  entered 
into  a  most  scrutinising  examination  of  the  nature  of  the 
powers  given  them,  for  the  purpose  of  discovering  not 
only  the  defect,  but,  if  possible,  the  remedy.  A  mere 
glance  at  the  problem  presented  for  their  solution,  must 
have  been  sufficient  to  convince  them  that  the  defect 
existed  in  the  corporeal  powers,  and  that  it  consisted  of 
their  inability  to  execute,  fully,  the  mandates  of  the 
mind.  But  to  find  the  remedy  was  a  much  more  difficult 
task  ;  and  the  fact  that  they  hit  upon  one  so  appropriate 
and  so  effectual  as  the  creation  of  value,  evinces  a  degree 
of  genius  and  judgment  that  would  do  honor  to  the  best 
intellects  of  the  present  day.  They  must  have  per- 
ceived that  their  natural  powers,  both  mental  and  physi- 
cal, were  so  constituted,  as  to  be  capable  of  giving  out 
streams  of  service  without  sensibly  diminishing  the  foun- 
tains ;  and  from  this  fact  they  must  have  inferred  that, 
by  a  skilful  blending  of  a  pdHion  of  these  services  with 
matter,  they  would  be  able  to  construct  artificial  machines, 
which,  when  placed  at  the  command  of  the  natural 
machine  (the  body),  and  serving  in  concert  with  it, 
would  greatly  enlarge  its  powers.  This  inference 
enabled  them  to  conceive  the  proper  remedy,  and  they 
proceeded  accordingly.  Instead,  therefore,  of  expending 
the  entire  stream  of  mental  and  physical  services  in 
direct  efforts  to  modify  and  secure  the  immediate  objects 
of  desire,  they  incorporated  a  portion  of  it  with  natural 


CHAP.  I.  ORIGIN    OF    WEALTH.  25 

products  in  such  a  manner  as  to  constitute  secondary  or  ar- 
tificial machines  adapted  to  aid  the  primary  or  natural  pow- 
ers in  securing  the  objects  of  desire.  In  other  words,  they 
gave  a  separate  and  independent  existence  to  a  portion 
of  these  services,  and  placed  them  as  intermediate  agents 
between  desires  and  their  objects,  there  to  labor,  in 
concert  with  the  natural  powers,  in  bringing  the  two 
together.  The  manner  in  which  these  artificial  machines 
aid  the  natural  one,  is,  by  enlarging  either  the  boundaries 
of  its  power  or  its  productiveness.  Every  machine  is  so 
constructed  as  to  secure  one  or  other  of  these  results — 
sometimes  both.  A  ship,  which  enables  us  to  cross 
oceans,  will  serve  as  an  illustration  of  the  first,  since  we 
could  not  compass  that  end  unaided  by  other  means  than 
those  directly  furnished  by  nature.  A  plough,  or  any 
other  labor-saving  machine,  will  illustrate  the  second; 
and  a  steam  engine  as  well  as  many  other  machines, 
possess  both  qualities.  These  machines  constitute 
value  in  its  productive  form.  Their  services,  in  con- 
nection with  those  of  the  mental  and  muscular  powers, 
are  transferred  to  matter,  and  so  blended  with  it,  as  to 
produce  finished  objects  of  desire.  These  constitute 
value  in  its  consumable  form.  Before  the  creation  of 
value,  the  streams  of  mental  and  muscular  service  went 
out  from  their  source  directly  to  the  objects  of  desire, 
and  after  being  incorporated  with  them,  brought  them 
back  to  replenish  the  fountain ;  but  now  they  pass  from 
their  source  to  these  auxiliary  machines,  therree,  greatly 
enlarged,  to  the  immediate  objects  of  desire,  and  thence, 
laden  with  these  objects,  return  to  their  source.  Value 
has  thus  added  a  new  and  most  efficacious  link  to  the 
chain  which  forms  the  circuit.  But  I  am  anticipating. 
These  are  topics,  the  discussion  of  which  belong  pro- 
perly to  the  next  chapter.  Let  us  return,  therefore, 
3* 


26  ORIGIN    OF    WEALTH.  PA&T  I. 

from  a  digression  which  perspicuity  seemed  to  demand. 
Such  is  value  in  its  primitive  or  most  rudimental  form. 
I  have  shown  that  the  unavoidable  necessity  of  having 
more  food  than  nature  provided  direct  means  for  securing, 
must  have  been  the  primary  cause  of  its  origin.  But 
we  must  not  forget  that  there  are  other  wants,  treading 
close  upon  the  heels  of  this,  which  are  almost  as  urgent 
in  their  promptings.  Closely  allied  to  those  already 
named,  is  the  desire  of  clothing  and  tenements,  as  a 
means  of  preserving  life  and  health,  by  affording  pro- 
tection against  changes  of  temperature,  and  other  in- 
clemencies of  weather.  So,  also,  the  desire  of  nourish- 
ment for  offspring,  until  such  times  as  their  powers  are 
sufficiently  matured  to  procure  it  for  themselves,  as  a 
means  of  perpetuating  the  species.  The  instinct  which 
gives  birth  to  the  desire  last  named,  is  common  to  every 
variety  of  the  animal  kingdom ;  and  in  all  of  every' 
species,  nature  has  been  careful  to  plant  it  so  deep,  and 
to  aid  its  accomplishment  by  means  of  the  vehemence  of 
another  desire,  and  the  unequalled  force  of  parental  affec- 
tion, that  nothing  but  sustenance  is  required  to  secure 
the  end  in  view.  And  whilst  the  offspring  of  the  lower 
orders  of  animals  are  capable,  almost  from  their  birth, 
of  procuring  food  for  themselves,  we  find  human  offspring 
utterly  helpless  for  years,  the  preservation  of  their  lives 
depending  entirely  upon  parental  guardianship  and 
nourishment.  The  parents  of  the  former  have  not, 
like  those  of  the  latter,  been  endowed  with  powers  capable 
of  creating  auxiliary  means  to  aid  them  in  procuring  the 
objects  of  want.  I  notice  this  remarkable  fact,  not  only 
for  the  purpose  of  showing  the  imperative  character  of 
the  desire  we  are  now  considering,  but  also,  for  the 
strong  confirmatory  evidence  it  affords  that  value  origi- 
nated in  the  causes  here  pointed  out ;  for  in  the  laws  of 


CHAP.  I.  ORIGIN    OF    WEALTH.  27 

nature,  as  established  by  their  Author,  the  adaptation  of 
means  to  ends  are  always  perfect. 

The  desire  of  air,  water  and  food,  I  have  called  the 
first  circle  of  wants  ;  the  desire  of  clothing  and  tenements, 
and  of  nourishment  for  offspring,  may  be  termed  the 
second ;  and  the  two  together,  or  rather  their  objects, 
may  be  regarded  as  essential  to  life.  These,  therefore, 
we  may  term  wants — all  the  circles  beyond  them,  desires. 
I  have  said  that  the  objects  essential  to  life,  could  not 
be  procured  without  the  aid  of  value ;  and  for  evidence 
of  the  truth  of  that  assertion,  I  may  confidently  refer  to 
whatever  is  known  of  the  condition  of  the  rudest  tribes 
of  savages  in  all  ages  of  the  world :  the  records  of  history 
may  be  searched  in  vain  for  an  instance  in  which  a  com- 
munity or  tribe  of  men  have  existed,  entirely  destitute 
of  artificial  machines.  It  is  to  be  observed,  however, 
that  mankind  need  but  little  of  value  to  enable  them  to 
procure  the  objects  indispensable  to  life.  A  few  rude 
and  imperfect  machines — such,  for  example,  as  the  most 
uncivilized  of  men  employ  as  instruments  to  aid  them  in 
securing  fish  and  game — have  been  found  adequate  to 
this  primary  end.  These  imperfect  instruments,  and 
their  products,  represent  wealth  in  its  most  elementary 
form — that  form  in  which  it  is  endowed  with  no  other 
attribute  of  productiveness  than  the-  one  conferred  by  the 
single  expedient  which  first  brought  value  in  existence. 
In  this  initial  form,  wealth  must  be  regarded  as  merely 
an  inactive  germ,  in  which  the  principles  of  development 
and  preservation  are  either  absent,  or  exist  in  such 
feeble  degrees  that  every  effort  at  expansion  is  at  once 
suppressed  by  violence  and  rapine. 

Wealth,  in  this  its  embriotic  form,  seems  to  have 
been  sufficient  to  satisfy  that  portion  of  the  human  family 
who  have  not  yet  emerged  from  the  savage  state ;  at 


28  ORIGIN    OF   WEALTH.  PART  I. 

least,  they  have  failed,  either  through  ignorance  or  the 
feebleness  of  their  desires,  to  adopt  the  needful  expedi- 
ents for  promoting  its  development  and  securing  its  pre- 
servation. Not  so,  however,  with  the  other  portion  of 
mankind.  They  have  not  been  satisfied  with  a  single 
intellectual  achievement  which  enabled  them  to  taste  the 
first  fruits  of  wealth,  and  by  that  means  to  preserve 
life  and  perpetuate  the  species  ;  but  on  the  contrary, 
prompted  by  a  desire  to  enlarge  the  boundaries  of  their 
happiness,  by  presenting  for  fruition  the  objects  of  their 
less  essential  but  equally  importunate  desires,  and 
guided  by  a  more  enlightened  judgment,  they  have  suc- 
ceeded in  imparting  to  this  germ,  principles  of  develop- 
ment and  preservation,  so  appropriate  and  effective,  that 
they  have  transformed  it  into  the  stupendous  phenome- 
non, Social  Wealth.  The  intellectual  expedients  of  a 
general  or  social  character,  adopted  and  employed  in 
bringing  about  this  transformation,  we  shall  find  to  be 
the  four  following — namely :  1,  The  recognition  and 
enforcement  of  the  Right  of  private  Property,  especially  in 
Land  ;  2,  Commerce ;  3,  Money  ;  4,  Credit.  To  this 
list  might  be  added  that  fundamental  principle  of  the 
Social  Contract,  the  recognition  and  social  guaranty  of 
the  Right  of  Life.  But  since  that  principle  is  broader 
and  deeper  than  the  province  of  wealth — constituting, 
in  fact,  the  foundation  of  the  science  of  Politics,  and 
extending  over  its  entire  domain,  and  being  withal, 
mainly  designated  to  protect  the  person  rather  than  the 
property — I  do  not  feel  at  liberty  to  include  it ;  and 
yet  we  shall  find,  that  the  aid  it  affords  in  the  produc- 
tion and  preservation  of  wealth,  although  incidental,  is 
not  only  effective  but  indispensable. 

While  bodily  and  mental  services  may  be  said  to  con-= 
stitute  the  vital   principle  of  value  in  its  rudimental 


CHAP.  I.  ORIGIN    OF    WEALTH.  29 

form,  and  while  the  intellectual  expedient  which  first 
diverted  a  portion  of  these  services  from  direct  to  inter- 
mediate objects  of  desire,  may  be  regarded  as  the  funda- 
mental principle  of  wealth,  since  it  gave  a  separate  and 
independent  existence  to  value,  in  the  form  of  a  germ 
capable  of  aiding  in  its  own  development — the  four  expedi- 
ents last  named  may  be  regarded  as  the  corner-stones  of 
social  wealth;  for  we  shall  find  that  they  constitute  the 
social  basis  on  which  individuals  have  reared  that 
immense  superstructure.  Existing  together  and  their 
tendencies  operating  in  harmony  and  concert,  these 
intellectual  and  social  devices  have  given  so  much  free- 
dom of  action  to  the  productive  faculties  of  mankind, 
such  variety  and  perfection  to  auxiliary  machines,  and 
have  so  increased  the  security  of  both  from  trespass  and 
spoliation,  that  the  rivulets  of  primitive  value  have  been 
expanded  into  full,  broad  rivers  of  social  wealth.  They 
have  thus  enlarged,  immeasurably,  the  circle  of  human 
enjoyments,  and  thereby  augmented  the  sum  of  human 
happiness.  And  these,  as  I  have  endeavored  to  show, 
are  the  ultimate  ends  which  social  wealth  was  intended 
to  secure, — these  the  motives  which  prompted  its  origina- 
tion, and  still  prompt  its  production. 


CHAPTER   II. 

OF  THE  NATURE  OF  WEALTH, 

AND  OF  THE  EXPEDIENTS  AND  MACHINERY  OF  A  GENE- 
RAL OR  SOCIAL  CHARACTER,  INVENTED  AND  EMPLOYED 
BY  MANKIND,  IN  ITS  PRODUCTION  AND  PRESERVATION. 

In  treating  of  the  origin  of  wealth,  I  gave  also,  what 
-perspicuity  seemed  to  require,  an  inkling  of  its  nature. 
I  now  propose  to  enter  into  a  more  extended  examina- 
tion of  this  subject,  believing  that  a  thorough  understan- 
ding of  the  nature  of  wealth,  and  of  the  social  instru- 
mentalities which  concur  in  its  production  and  preserva- 
tion, are  indispensable  to  a  correct  apprehension  of  this 
science. 

We  must  commence  with  an  analysis  of  value,  since, 
as  already  stated,  value  is  the  attribute  which  consti- 
tutes the  essential  portion  of  wealth  ;  and  it  is,  moreover, 
the  name  I  have  applied  to  wealth  itself,  in  its  most 
rudimental  form. 

First  in  order,  then,  will  be  a  definition  of  the  term,  or 
an  explantion  of  the  sense  in  which  I  intend  to  employ 
it.  Whatever  may  have  been  the  primary  sense  attached 
to  the  word  value,  it  has,  like  almost  all  other  words, 
from  a  paucity  of  terms  and  other  imperfections  pecu- 
liar to  language,  become  ambiguous  ;  i.e.  it  has  more  than 
one  signification  attached  to  it.  It  is  generally  used 
to  denote  that  property  of  things  on  which  their  market 
worth  or  price  is  based;  but  it  is  often  employed  to 


32  NATURE  OF  WEALTH.  PART  I. 

indicate  those  properties  of  things  which  render  them 
either  useful  or  agreeable,  in  which  sense  it  is  synony- 
mous with  utility  ;  and  it  is  sometimes  used  as  synony- 
mous with  power,  causation,  signification,  &c.  Now,  it  is 
in  the  sense  first  given  that  I  intend  to  employ  the  term, 
and  shall  confine  its  meaning  strictly  within  those  limits. 
This  was  doubtless  -the  primary,  as  it  is  still  the  usual 
signification  attached  to  it,  for  I  hold  that  the  term  is 
not  only  peculiar  to  this  science,  but  that  it  is  indispen- 
sable to  a  clear  exposition  of  its  first  principles ;  and 
hence  am  unwilling  that  it  should  be  spoiled  by  being 
pressed  into  other  service.  Some  writers  on  the  subject 
of  wealth,  having  noticed  that  this  term  was  rendered 
ambiguous  by  the  gradual  enlargement  of  its  meaning, 
have  abandoned  its  use,  and  substituted  the  term,  Ex- 
changeable Value.  Regarding  this  term  as  less  appro- 
priate and  less  compact,  and  the  adjective  as  uncalled 
for,  I  shall  not  adopt  it,  but  will  continue  to  employ  the 
original  term  in  accordance  with  this  strict  definition. 

Thus  defined,  what  is  Value?  It  is  believed  that  its 
nature  may  be  most  clearly  shown  by  a  classification  in 
which  all  things  may  by  grouped  under  one  or  other  of 
the  following  heads.  1,  The  useless,  or  those  which  pos- 
sess neither  value  nor  utility  ;  2,  the  merely  useful,  or 
such  as  posses  utility  without  value  ;  3,  the  valuable,  or 
those  which,  besides  being  useful,  are  also  invested  with 
the  attribute,  value. 

The  first  class  will  be  made  up  of  the  things  destitute 
of  properties,  either  direct  or  indirect,  immediate  or  re- 
mote, adapted  to  the  satisfaction  of  human  wants  or  de- 
sires, if,  indeed,  there  be  any  of  that  character,  which 
may  be  doubted.  True,  we  have  not  discovered  the 
utility  of  poisonous  reptiles,  noxious  plants  and  vapors, 
nor  of  many  other  things  in  the  mineral,  vegetable,  and 


CHAP.  II.  NATURE    OF    WEALTH.  33 

animal  kingdoms  ;  but  it  is  not  improbable  that,  with 
more  perfect  knowledge,  we  shall  be  able  to  appropriate 
them  all  to  the  advancement  of  human  happiness.  Or 
it  may  well  be,  that  in  the  economy  of  nature  they  al- 
ready subserve  this  end  without  our  being  conscious 
of  it. 

The  second  class  will  consist  of  such  things  as  may  be 
obtained  without  effort,  but  which,  nevertheless,  pos- 
sess properties  adapted  to  the  satisfaction  of  our  wants 
and  desires, — such,  for  example,  as  atmospheric  air, 
solar  light  and  heat,  water,  &c.  These  things  are 
deemed  of  high  utility,  and  justly  so,  since  they  are  not 
only  essential  to  our  happiness,  but  to  our  existence ; 
and  yet  they  have  no  value,  they  will  command  no  price. 
Why  not  ?  Because  they  have  been  furnished  by  nature 
in  such  profusion  that  all  may  partake  of  them  at  their 
pleasure,  without  effort,  and  without  diminishing  the 
supply.  They  are  the  free  gifts  of  nature  to  her  com- 
mon children. 

The  third  class,  like  the  second,  will  be  made  up  of 
direct  and  intermediate  objects  of  desire,  — of  things 
capable  of  ministering,  either  immediately  or  remotely, 
to  the  advancement  of  human  happiness ;  but  it  will  be 
confined  to  such  of  these  as  cannot  be  obtained  without 
human  effort,  or  price.  In  other  words,  the  things 
possessing  useful  properties  imparted  to  them  by  artifi- 
cial means,  will  constitute  the  third  class.  This  -ac- 
quired utility,  or  artificial  utility,  is  termed  value.  To 
obtain  it,  we  must  either  create  it,  inherit  it,  or  give 
equivalent  value  in  exchange  for  it.  Hence,  this  class 
of  things  will  include  every  component  part  of  the  aggre- 
gate of  social  wealth,  and  these  only. 

We  find,  then,  that  the  utility  conferred  upon  things 
by  nature,  and  that  imparted  to  them  by  the  direct  and 
4 


34  NATURE  OF  WEALTH.          PART  I. 

indirect  efforts  of  mankind,  are  altogether  different 
properties.  The  first  constitutes  no  part  of  social 
wealth ;  the  second  is  its  vital  principle  or  essential  por- 
tion ;  and  yet  we  witness  the  remarkable  fact,  that  most 
if  not  all  who  have  hitherto  written  on  this  science,  have 
failed  to  distinguish  the  features  in  which  they  differ ; 
or  if  they  have  succeeded  in  this,  they  have  failed  to 
separate  them  by  any  thing  like  a  well  defined  line. 
They  seem  indeed  to  have  regarded  value  and  utility 
not  only  as  synonymous  terms,  but  as  identical  things, 
and  they  have  thus  led  themselves  and  their  readers  into 
a  labyrinth  of  errors.  The  fact  that  value  and  utility 
are  two  distinct  properties  of  things,  may  be  demonstrat- 
ed by  a  mere  reference  to  the  two  familiar  articles,  wine 
and  water.  The  first  is  the  more  valuable,  it  will  com- 
mand the  higher  price ;  and  yet  all  will  admit  that  the 
second  is  the  more  useful  of  the  two.  Utility  may  be 
regarded  as  the  essential  principle  of  all  objects  of 
desire,  whether  direct  or  intermediate,  and  hence,  it  in- 
cludes value  as  well  as  natural  utility.  Value  is  that 
portion  of  utility  which  has  been  created  by  artificial 
means.  Every  thing  to  which  this  attribute  has  been 
communicated,  is  admitted  to  membership  in  the  family 
of  things  called  social  wealth,  while  those  to  which  it  has 
not  been  imparted  is  excluded  from  that  family.  Hence, 
it  is  the  distinctive  attribute  of  wealth  ;  and  being  so, 
it  must  be  regarded  as  the  phenomenon  whereof  it  is  the 
peculiar  province  of  this  science  to  treat. 

The  necessity  that  prompted  the  origination  of  value, 
and  the  means  employed  in  creating  it,  in  the  imperfect 
form  in  which  it  exists  among  savages,  having  been  al- 
ready pointed  out,  do  not  need  repetition  here,  fur- 
ther than  to  say,  that  value,  in  that  form,  is  the  con- 
tinued existence  of  nervous  and  muscular  powers  after 


CHAP.  II.        NATURE  OF  WEALTH.  35 

they  have  been  transferred  from  their  owner  to  the 
matter  upon  which  he  exerted  them.  Or  we  may  say, 
that  it  consists  of  simple  artificial  machines,  planned  by 
the  intellect  and  fashioned  by  the  hands,  designed  to  aid 
the  natural  powers  in  procuring  objects  indispensa- 
ble to  life,  to  the  end  that  mankind,  like  other  creatures 
more  directly  provided  for,  might  be  able  to  obey  the 
first  law  of  animated  nature,  self-preservation.  Value, 
in  that  imperfect  form,  was  not,  however,  adequate  even 
to  this  primary  end,  since  it  must  soon  have  fallen  a 
prey  to  the  spoliation  of  the  stronger,  unless  protected 
by  some  social  guaranty  of  individual  rights.  In  illus- 
tration of  this  truth,  let  us  suppose  that  a  tribe  of  men, 
in  a  primitive  condition,  without  other  means  of  procur- 
ing food  than  those  afibrded  by  nature,  are  threatened 
with  famine ;  that  in  this  pressing  emergency,  one  of 
their  number,  after  wearily  tasking  his  intellect  and 
consuming  his  time  by  industrious  effort,  constructs  a 
machine  by  aid  of  which  he  can  procure  sufficient  food 
for  himself  and  family,  but  not  for  the  whole  tribe ;  and 
that  this  machine,  instead  of  being  guarantied  to  him,  in 
virtue  of  the  right  acquired  by  the  incorporation 
of  his  skill  and  labor  with  it,  be  left  to  such  owner- 
ship as  the  law  of  strength  awards.  In  that  event, 
unceasing  and  exterminating  strife  would  give  it,  ulti- 
mately, to  the  strongest,  and  the  result  could  not  fail  to 
be  highly  injurious,  if  not  fatal,  to  a  majority  of  the 
tribe — indeed,  to  all  but  one.  It  is  this  necessity  that 
has  given  birth  to  the  recognition  and  social  guaranty  of 
the  right  of  private  property,  without  which  social 
wealth  could  not  exist,  nor  even  its  undeveloped  germ, 
for  the  necessity  is  of  such  an  imperative  character  that 
we  find  the  rudest  savages  enforcing,  to  some  extent,  the 
rule  of  right,  as  a  means  of  preserving  their  imperfect 


86  NATURE  OF  WEALTH.  PART  I. 

creations  of  value.  Man's  reasoning  powers  enable  him 
to  recognise  this  right,  and  it  may  be  that  he  has  an  in- 
nate sense  of  justice,  which,  as  well  as  necessity,  points 
to  its  social  guaranty,  since,  as  is  well  known,  nature 
often  secures  her  aims  by  plural  means.  But  in  this 
case  there  can  be  little  doubt  that  necessity  alone  is  a 
sufficient  cause  to  produce  the  effect. 

Again.  Nature,  besides  distributing  food  with  a 
sparing  hand,  has  made  even  this  scanty  supply  subject 
to  the  varying  influence  of  the  seasons.  Except  in  some 
favored  climates  where  vegetable  life  and  development 
are  perennial,  she  furnishes  her  vegetable  stores  for  but 
a  portion  of  the  year  ;  and  since  the  subordinate  animals 
are  dependent  on  these  for  subsistence,  it  follows  that 
they  must  migrate  in  search  of  them.  The  vegetable 
and  animal  kingdoms  constituting  the  only  materials  on 
which  man  can  feed,  it  is  apparent  that  he  too  must 
either  migrate  or  perish,  unless  his  intellectual  skill  can 
invent  a  better  expedient.  Behold  the  expedient  of 
hoarding  !  This  method,  however,  cannot  be  adopted 
with  any  chance  of  success,  unless  aided  by  the  social 
guaranty  of  the  right  of  property ;  because,  in  the  first 
place,  there  would  be  no  surplus  food  to  hoard  until  the 
security  of  property  had  stimulated  the  production  of 
auxiliary  machines  to  aid  in  its  procurement,  and,  in  the 
next  place,  because  it  would  be  quite  useless  to  hoard 
the  surplus  where  the  owners  are  subject  to  the  torture, 
and  their  property  to  the  spoliation,  of  the  stronger.  It 
may  be  inferred,  therefore,  that  the  unavoidable  neces- 
sity of  preserving  food  for  use,  in  seasons  of  scarcity, 
when  nature's  storehouse  is  either  exhausted  or  locked 
up,  also  compels  even  the  most  uncivilized  portion  of 
mankind,  in  some  degree,  to  guaranty  to  those  who  pro- 
duce value,  its  peaceable  possession,  as  a  means  of  pro- 


CHAP  II,  NATURE  OF    WEALTH.  37 

mo  ting  both  its  development  and  preservation.  Among 
savage  tribes  this  guaranty  is,  however,  very  imperfect — 
sufficient  merely  to  perpetuate  their  existence.  In 
civilized  communities  it  is  more  perfectly  recognised, 
and  more  rigorously  enforced  ;  and  we  shall  see  presently, 
that  it  is  to  these  causes,  combined  with  a  skilful  en- 
largement of  the  right  of  property  so  as  to  include  land 
and  some  other  natural  products  in  the  social  guaranty, 
that  wealth  is  mainly  indebted  for  its  development,  and 
civilization  for  its  origin  as  well  as  its  superior  advances. 

Let  us  now  take  this  undeveloped  germ  of  wealth,  as 
we  find  it  existing  in  the  hands  of  uncivilized  men,  and 
trace  its  progress  "when  under  the  control  of  those  more 
gifted.  We*  shall  thus  learn  by  what  methods  they 
have  succeeded  in  imparting  to  the  dormant  germ,  the 
active  principle  of  development  and  the  increased 
security  from  violende,  by  which  it  has  been  expanded 
into  social  wealth.  If  judged  by  their  effects,  these  me- 
thods must  possess  an  extraordinary  degree  of  efficacy, 
for  they  have  already  transferred  the  wilderness  into 
cultivated  fields,  dotted  the  earth  with  cities,  towns  and 
hamlets,  covered  the  ocean  with  commerce,  and  elevated 
man  from  a  state  of  barbarism  to  civilization,  besides 
increasing  immensely  the  population  of  the  world. 

The  portion  of  services  contributed  by  the  mind  in 
the  production  of  value,  is  called  Skill,  the  portion  con- 
tributed by  the  body,  Labor  ;  the  joint  service  of  the 
two,  I  shall  term  Industry.  The  first  value  produced  in 
the  world  must  have  emanated  exclusively  from  these 
two  sources,  because  skill  and  labor  could  have  had  no 
artificial  aids  until  such  were  fashioned  by  themselves. 
But  the  moment  a  share  of  the  services  of  skill  and 
labor  was  diverted  from  the  immediate  to  the  interme- 
4* 


38  PLAN    OF  SOCIAL  WEALTH.  PART  I. 

diate  objects  of  desire,  that  moment  these  objects  were 
made  to  assume  the  forms  of  auxiliary  machines,  (better 
known  perhaps  by  the  name  of  productive  capital)  so  as 
to  aid  in  the  process.  By  this  expedient,  the  projectors 
of  wealth  made  value  to  concur  in  the  process  of  creat- 
ing other  value,  thus  pressing  it  into  the  service  of 
reproducing  itself — or  rather,  of  aiding  in  that  process, 
for  it  is  familiar  knowledge  that  the  most  perfect  ma- 
chinery is  unproductive  without  the  superintendence  of 
skill  and  labor.  For  example,  the  method  of  breaking 
up  the  soil  by  means  of  the  horse  and  plough,  or  even 
by  the  spade,  is  a  great  improvement  on  the  natural  plan 
of  using  the  fingers  and  toes  ;  but  these  means  cannot  be 
employed  without  human  aid  and  guidance.  Therefore, 
all  three  must  concur  in  the  process,  whence,  it  is  appar- 
ent, that  the  value  produced  will  be  the  common  offspring 
of  this  triple  parentage.  Nor  are  these  all.  Nature, 
in  various  ways,  aids  in  the  process  ;  and  it  has  been 
found  necessary  to  subject  to  individual  appropriation 
and  ownership,  some  of  the  means  she  contributes. 
Nature,  for  example,  provides  the  soil  whereon  the  art 
of  agriculture  is  prosecuted,  together  with  the  atmo- 
sphere, light,  heat  and  rain,  required  to  develope  the 
plants  and  perfect  the  fruits ;  and,  although  the  soil, 
like  the  other  contributions  of  nature  just  named,  is 
the  free  gift  of  God  to  his  creatures,  and  hence,  would 
seem  to  have  been  designed,  either  for  the  common  use 
of  all  or  for  equitable  apportionment  amongst  all 
the  members  of  the  human  family  as  their  birth- 
right— yet,  it  has  been  found  that  no  cultivation 
can  take  place  unless  the  soil  be  made  subject  to  indi- 
vidual ownership  :  because,  in  the  first  place,  it  must  be 
fitted  for  culture  by  clearing,  fencing,  and  other  prepar- 
atory outlays  of  industry  and  capital,  which  could 


CHAP.  II.  PLAN  OF    SOCIAL  WEALTH.  39 

never  occur  unless  private  ownership  were  first  recog- 
nised, and  secured  by  the  social  guaranty ;  and,  in  the  next 
place,  no  one  would  be  found  willing  to  sow  and  cultivate 
unless  he  first  had  assurance  that  he  alone  would  be 
permitted  to  reap.  Here,  then,  was  another  dilemma. 
The  soil  could  not  be  made  subject  to  individual  appro- 
priation, to  purchase  and  sale,  and  to  bequest  or  inherit- 
ance at  the  death  of  the  owner,  without  injustice  to 
those  who  should  subsequently  come  into  the  world 
destitute  of  such  inheritance  ;  and,  on  the  other  hand, 
wealth  could  not  be  produced,  the  soil  could  not  be  cul- 
tivated, nor  even  buildings  erected  upon  it,  without  first 
guaranteeing  the  right  of  individual  ownership.  How 
should  justice  obviate  this  difficulty,  without  disturbing 
the  equilibrium  of  her  scales !  This  has  been,  and 
indeed  still  is,  regarded  by  many  as  a  problem  for 
solution  ;  for,  although  mankind,  perceiving  the  immense 
advantages  which  would  be  secured,  and  bowing  to  the 
necessity  of  the  case,  have  not  hesitated  to  guarantee  the 
right  of  private  property  in  land,  yet  it  is  not  to  be  dis- 
guised that  many  are  dissatisfied  with  the  arrangement. 
Their  objections  are  not,  however,  founded  in  reason. 
The  injustice  is  but  apparent,  not  real,  as  I  will 
endeavor  to  demonstrate  in  another  place.  At  present, 
we  will  proceed  with  the  immediate  subject  in  hand. 

We  have  now  reached,  in  the  progress  of  our  enquiry, 
an  interesting  period  in  the  development  of  wealth. 
Like  the  chrysalis,  it  is  about  to  assume  a  newT  form  and 
a  more  perfect  existence.  Aided  by  the  Social  Contract, 
and  especially  by  its  economic  provisions,  rudimental 
value  is  now  to  be  transformed  into  social  wealth.  Let  us 
glance  at  the  causes  concerned  in  the  production  of  that 
phenomenon. 

We  left  that  division  of  mankind  whose  progress  in 


40  PLAN  OF  SOCIAL  WEALTH.  PART  I. 

wealth  we  arc  now  tracing,  in  the  possession  of  some 
artificial  machines  designed  to  aid  them  in  procuring 
the  immediate  objects  of  desire,  and  of  others  capable  of 
aiding  in  the  reproduction  of  themselves  and  of  value 
generally,  whether  in  the  form  of  immediate  or  interme- 
diate objects  of  desire.  Now,  inasmuch  as  mankind,  in 
the  absence  of  external  restraint,  are  prone  to  trespass 
on  the  rights  of  others,  it  is  evident  that  even  these  two 
classes  of  auxiliaries  must  have  been  comparatively  use- 
less for  want  of  power  in  the  individual  to  protect  his  pro- 
perty from  spoliation,  and  for  want  of  undisturbed 
possession  of  land  to  till ; — and  hence,  that  the  develop- 
ment of  wealth  must  have  rested  at  these  limits,  and  the 
satisfaction  of  wants  have  been  confined  to  their  two 
narrowest  circles,  so  long  as  these  hindrances  to  pro- 
gress remained.  When  these  defects  in  the  plan  of 
wealth,  and  the  injurious  consequences  resulting  from 
them,  were  perceived,  the  intellectual  faculties,  doubt- 
less at  once  assumed  the  task  of  providing  a  remedy. 
As  usual,  they  proved  themselves  equal  to  the  effort. 
They  conceived  and  planned  the  Social  Contract,  or,  as 
I  choose  to  term  it  here,  the  Government  Machine, 
which,  as  may  be  inferred  from  its  effects  wherever  it 
has  been  adopted  by  society,  has  proved  to  be  a  most 
efficacious  remedy. 

There  were  three  principal  aims  (to  say  nothing  of  in- 
cidental and  less  important  objects,)  which  this  machine 
was  designed  to  aid  in  securing — namely  :  1,  The  protec- 
tion of  life,  liberty,  and  personal  faculties.  2,  The 
protection  of  value.  3,  The  creation  and  protection  of 
what  may  be  termed  legal  value  in  land  and  in  some 
other  natural  products.  Of  the  first  and  highest  aim,  I 
have  but  little  to  say  in  this  place.  Its  consideration, 
as  already  noticed,  belongs  to  another  and  wider  field  of 


CHAP.  II.  PLAN  OF  SOCIAL  WEALTH.  41 

social  science.  To  that  we  leave  it,  with  the  single  re- 
mark, that  the  incidental  aid  thereby  rendered  to  wealth, 
is  indispensable  to  its  growth  and  its  utility ;  since,  if 
the  lives  and  personal  faculties  of  mankind,  were  not 
protected  by  means  of  the  social  guaranty,  it  would  be 
neither  possible  for  them  to  aid  in  the  production  of 
wealth,  nor  useful  to  have  its  peaceable  possession  se- 
cured to  them.  The  second,  I  have  already  shown  to 
to  be  so  requisite  to  life,  that  the  least  enlightened  sec- 
tion of  the  human  family  are  compelled,  in  some  degree, 
to  protect  their  meagre  creations  of  value, — the  only 
difference  between  them  and  the  most  enlightened  sec- 
tions, in  this  respect,  being,  that  the  protection  afforded 
by  the  latter  is  more  perfect.  But  the  third  aim — the 
investiture  of  land  and  its  natural  products,  with  the  at- 
tribute of  legal  value,  by  ordaining  that  they  should  be 
subject  to  individual  ownership — was  a  new  feature  in 
the  government  machine.  The  first  two  features,  more 
or  less  perfectly  developed,  are  common  to  all  govern- 
ments, whether  of  savage  or  of  civilized  communities, 
but  this  is  peculiar  to  the  latter.  In  other  words,  the 
right  of  private  property  in  land  is  neither  recognised 
nor  guaranteed  in  the  political  organizations  of  savage 
tribes,  while  in  those  of  all  civilized  communities  it  is. 
This  may  be  regarded  as  the  chief,  if  not  the  only  funda- 
mental cause  of  the  superior  advances  of  the  latter  in 
the  development  of  wealth  and  its  immediate  offspring, 
civilization. 

The  plan  of  this  additional  feature  of  the  government 
machine,  may  be  thus  briefly  stated  :  The  community, 
in  their  collective  or  social  capacity,  as  personified  by 
king  or  representatives,  first  assume  the  ownership  of  all 
the  land  (including  all  its  natural  products,)  within  their 
jurisdiction  :  they  next  invest  it  with  legal  value  by  es- 


42  PLAN  OF  SOCIAL  WEALTH.  PART  I. 

tablishing  an  arbitrary  valuation  or  price  for  a  given 
quantity  of  it,  upon  the  payment  of  which,  by  individuals, 
they  are  recognised  as  its  exclusive  owners,  and  the 
right  to  possess  it  guaranteed  to  them  and  their  heirs 
forever.  Or,  it  may  be  stated  thus :  The  society  or 
state,  in  exchange  for  proportionate  quantities  of  artifi- 
cial utility )  transfers  to  its  individual  members  all  the 
natural  utility  under  its  control,  of  which  that  of  land 
and  its  natural  products  is  the  chief,  and  guarantees  to 
them  its  exclusive  use,  together  with  the  right  to  dispose 
of  their  respective  portions,  the  same  as  though  it  were 
value  of  their  own  creation.  Or,  in  other  language 
still :  By  the  voluntary  act  of  at  least  a  majority  of  the 
members  constituting  a  society  or  state,  the  individuals 
first  surrender  to  the  mass  the  common  right  of  each  to 
partake  of  the  natural  utility  inherent  in  land  and  its 
natural  products ;  and  the  mass  then  returns  this  right, 
in  definitive  portions,  accompanied  with  the  social  guar- 
anty, to  such  of  the  members  as  are  able  and  willing  to 
give  in  exchange  fc/r  it  equivalent  quantities  of  artificial 
utility. 

Such  is  the  simple  plan  by  which  the  right  of  private 
property  in  land  has  been  established  and  perpetuated. 
Apparently,  but  little  of  genius  was  required  in  its  con- 
ception, but  little  of  skill  in  its  execution,  or  of  judg- 
ment in  its  adoption.  The  plan  appears  simple  and 
natural,  its  adoption  obvious  and  just,  and  yet  we  wit- 
ness the  surprising  fact  that  a  large  portion  of  the  hu- 
man family,  from  a  deficiency  either  of  genius  or  of 
judgment,  or  of  strength  in  their  desire  of  happiness, 
have  failed  to  avail  themselves  of  its  momentous  benefits. 

Land  and  its  natural  products,  mines,  and  some  of 
the  smaller  bodies  of  water,  including  mill  seats  and 
fisheries,  are  the  only  kinds  of  natural  utility  that  have 


CHAP.  II.  PLAN  OF  SOCIAL  WEALTH.  43 

been  made  subject  to  individual  ownership,  and  this  for  the 
simple  reason  that  no  others  are  susceptible  of  being 
made  so.  There  are  many  other  gifts  of  nature  equally 
useful, — such,  for  example,  as  oceans,  lakes  and  bays  ; 
light,  heat,  electricity,  atmosphere  and  rain — but  their 
characteristics  are  such  as  to  render  them  mainly  inde- 
pendent of  human  control. — For  the  sake  of  convenience 
and  brevity,  I  shall  term  the  appropriated  natural  agents 
simply,  Land,  that  being  the  chief. 

Before  the  right'  of  property  in  land  was  established, 
there  were,  as  we  have  seen,  but  three  sources  whence 
value  emanated  ;  but  this  ingenious  device,  by  holding  in 
abeyance  the  aggressive  propensities  of  mankind,  per- 
mitted the  undisturbed  assistance  of  land.     The  foun- 
tain of  natural  wealth,  which  had  been  until  then  nearly 
sealed  up  by  unrestrained  rapine,  was  thus  opened  and 
converted  into  value,  while  the  vigorous  stream  of  ser- 
vice that  proceeded  from  it,  was  blended  with  those  of  the 
other   fountains.     This,   therefore,   established  another 
source  of  value,  making  the  whole  number  four ;  name- 
ly,   Skill,    Labor,  Value   (or  productive   capital,)   and 
Land.     These   are   the   prime  agents  of  wealth  ;  they 
constitute  its  great  productive  elements.     All  the  value 
that  has  ever  been  created,  all  the  wealth  that  has  ever 
been  produced,  distributed,  or  consumed,  has   resulted 
from  these  four  classes  of  productive  agents  ;  and  nearly 
all,   from  their  united   or  concurrent   services.     Value 
cannot,  under  any  circumstances,  be  produced  without 
the  concurrence   of    skill   and   labor ;   rarely,   if  ever, 
without  the  aid  of  capital  in  some  form  ;  and  only  upon 
unappropriated  water,  as  in  the  whale  fisheries  and  marine 
commerce,   without   the    concurrence    of    land.     Aside 
from  these  exceptions,  value  is  the  resulting  product  of 
the  blended  services  of  these  four  concurrent  agents  ; 


44  PLAN  OF  SOCIAL  WEALTH.  PART  1« 

from  them  alone  it  proceeds,  and  hence,  it  must  be  to  the 
proprietors  of  these  agents  that  the  revenue  or  profits 
accrue.  These  being  the  four  elements  consumed  in  the 
great  laboratory  for  forming  the  compound,  value,  and 
the  presence  of  each  being  necessary  to  the  success  of 
every  single  process,  it  follows  that  the  proprietors  of 
each  will  be,  in  every  process,  entitled  to  a  share  of  the 
resulting  product  or  revenue.  This  is  a  partnership  of 
Nature's  forming,  and,  as  will  be  shown  in  the  sequel, 
she  designed  that  the  aggregate  share  of  each  should  be 
equal. 

With  intellectual  skill  to  combine  and  direct,  with 
muscular  powers,  aided  by  artificial  machines  and  land, 
to  execute  ;and  with  the  right  of  private  ownership  and 
secure  possession  of  each,  recognised  and  enforced  by  the 
government  machine,  we  may  readily  perceive  that  man- 
kind were  able  to  compass  the  objects  of  numerous 
desires  which  the  direct  means  provided  by  nature  had 
not  enabled  them  to  reach.  But  the  means  were  stHl 
imperfect.  For  aught  we  have  yet  seen,  each  individual 
or  family  found  it  necessary  to  produce  for  itself  the 
direct  objects  of  desire,  and  also,  the  auxiliary  machines 
to  aid  in  their  procurement;  i.  e.,  the  wealth  consumed 
and  the  capital  employed  by  each  individual  or  family, 
must  have  been,  in  all  cases,  confined  to  the  identical 
value  which  each,  respectively,  had  created.  We  may 
safely  assume,  that  this  state  of  things  could  not  have 
existed  long,  before  the  intellectual  faculties — in  view  of 
the  manifest  fact  that  nature  had  endowed  different  indi- 
viduals with  different  degrees  of  mental  and  physical 
powers,  and  had  given  to  the  earth  great  diversity  of  soil 
and  climate — discovered  that  some  men  were,  by  nature 
and  circumstances,  best  adapted  to  the  production  of 
value  in  one  of  its  many  necessary  forms,  some  in  ano- 


CHAP.  II.  PLAN  OF  SOCIAL  WEALTH.  45 

ther,  and  so  on  ;  that  superior  skill,  and  consequently, 
enlarged  value,  resulted  from  the  continuous  exertion  of 
individual  industry  in  a  single  pursuit  ;  and  thence  in- 
ferred that  the  division  of  employments  would  facilitate 
and  perfect  the  processes  by  which  value  was  produced, 
and  thus  greatly  augment  its  volume.  But  how  should 
they  compass  these  advantages  ?  The  cultivator  of  the 
soil,  by  confining  himself  to  that  pursuit,  would  produce 
a  surplus  of  food,  but  then  he  would  be  destitute  of 
house  and  clothing,  and  of  many  other  things  essential 
to  his  convenience  and  happiness.  The  mechanic,  ma- 
chinist and  manufacturer  would  each  have  a  superabund- 
ance of  the  products  of  their  respective  arts,  but  inas- 
much as  none  of  these  are  suitable  for  food,  the  division 
of  employments  would  seem  to  sound  their  death  knell, — 
apparently,  under  its  adoption,  they  must  soon  die  of 
hunger.  The  difficulty  was  perceived,  the  mind  grap- 
pled with  it,  and  again  it  came  off  victorious,  as  witness 
the  intellectual  expedient,  Commerce. 

It  is  the  province  of  commerce  to  execute  the  inter- 
change of  surplus  commodities  of  value.  It  does  this 
by  receiving  them  from  their  producers,  carrying  and 
delivering  them  to  consumers,  and  completing  the  trans- 
fer in  all  cases,  whether  of  receipt  or  delivery,  by  an 
exchange  of  equivalents  or  equal  quantities  of  value. 

The  plan  and  machinery  of  commerce,  like  all  other 
human  contrivances,  were  doubtless  at  first  deplorably 
imperfect,  consisting,  we  may  suppose,  of  a  few  simple 
instruments  for  measuring  the  bulk  and  weight  of  com- 
modities, and  of  vehicles  merely  sufficient  to  transport 
from  one  to  another  the  surplus  commodities  of  neigh- 
boring producers.  But  the  advancing  knowledge  of 
mankind  in  the  science  and  arts  of  production  has  ena- 
bled them  to  render  this  expedient  more  and  more  perfect, 
5 


46  PLAN  OF  SOCIAL  WEALTH.  PART  I. 

until,  at  present,  we  find  the  plan  to  be  this :  Through 
its  prime  agents,  called  merchants,  commerce  presents 
to  every  producer  and  every  owner  of  value,  all  the 
varied  forms  of  artificial  utility,  and  invites  each  to 
give  of  such  of  his  products  as  he  needs  least,  in  ex- 
change for  an  equivalent  of  such  as  he  needs  most.  By 
means  of  this  simple  plan,  most  of  the  varied  wants  and 
desires  of  mankind  are  in  a  measure  amalgamated,  or 
changed  from  individual  to  social.  It  connects  together 
all  the  wants  and  desires  of  the  commercial  world  by  a  chain 
of  interdependence  similar  to  that  by  which  the  desires  of 
an  individual  are  woven  together.  They  are  thus 
thrown,  as  it  were,  into  a  community  or  oneness,  so  that 
the  possession  of  a  commodity  of  value  adapted  to  the 
satisfaction  of  a  single  want  or  desire,  is  thereby  ren- 
dered equally  available  in  the  satisfaction  of  all  others. 
It  is  thus  that  commerce  permits  the  division  of  employ- 
ments, from  which  such  immense  benefits  have  resulted. 
It  was  for  the  attainment  of  this  single  end  that  it  was 
devised  and  planned ;  and,  although  it  seems  to  fill  a 
more  important  post  if  not  a  wider  space  in  the  affairs 
of  life  than  all  other  processes  of  wealth  combined,  it 
performs  no  other  office. 

The  machinery  of  commerce  consists  of  merchants  and 
their  warehouses  stocked  with  every  form  of  artificial 
utility  ;  of  the  means  of  transport — such  as  roads  and 
canals,  wagons,  canal  boats,  steamboats  and  ships  ;  of 
measures  of  bulk,  length  and  weight, — such  as  the  bushel, 
the  yard-stick,  and  the  pound  weight ;  of  a  slight  en 
largement  of  the  government  machine,  so  as  to  establish 
rules  in  reference  to  the  transfer  of  property,  to  bills  of 
lading,  insurance,  &c.  This  list  is  not  yet  complete,  but 
let  us  for  the  present  consider  it  so,  in  order  that  we 
may  point  out  the  serious  nature  of  the  defect  which 


CHAP.  II.  PLAN  OF  SOCIAL  WEALTH.  47 

called  for  the  invention  and  adoption  of  the  highly  im- 
portant instrument  that  remains  to  be  named. 

Let  us  see  with  what  degree  of  facility  commerce 
will  accomplish  the  exchange  of  values  by  means  of  the 
machinery  just  named.  We  have  the  merchant  with  his 
warehouse,  commodities,  means  of  transport,  weights 
and  measures,  and  his  legal  rules  of  procedure.  Thus 
prepared,  we  will  suppose  that  an  agent  of  commerce 
and  a  producer  of  surplus  commodities,  being  mutually 
attracted  by  the  desire  of  gain,  or  by  the  desire  of 
obtaining  that  which  they  need  more  in  exchange 
for  that  which  they  need  less,  are  brought  together 
for  the  purpose  of  effecting  an  exchange  of  values. 
The  producer  presents  (we  shall  say,)  his  bushel  of 
surplus  wheat,  for  which  he  desires  sugar,  or  coffee, 
or  cloth.  The  merchant  stands  ready  and  willing 
to  give  either  in  exchange,  but  how  shall  he  ascer- 
tain, to  the  satisfaction  of  himself  and  the  producer  of 
the  wheat,  the  proper  quantity  ?  •  He  is  provided  with 
instruments  for  ascertaining  the  length,  bulk  and  weight 
of  commodities,  but  he  has  none  for  determining  their 
quantity  of  value ;  and  yet,  this  is,  in  all  cases,  the  es- 
sential portion  of  the  objects  to  be  exchanged.  He  may 
know,  perhaps,  that  the  quantity  of  value  in  any  given 
commodity  bears  a  fixed  relation  to  the  amount  of  the 
joint  service  of  industry,  capital  and  land  incor- 
porated with  it, — in  other  words,  that  it  is  equal  to  the  I/* 
cost  of  production,  plus  average  profits.  He  may  know, 
also,  that  supply  and  demand,  acting  in  obedience  to  the 
self-interest  of  men  and  to  their  desire  of  happiness,  in- 
dicate with  a  sort  of  vibrating  truthfulness,  the  com- 
parative cost  of  different  commodities.  But  how  shall  he 
contrive  to  measure  their  value  1  If  he  determines  that  a 
yard  of  cloth  is  equal  in  value  to  a  bushel  of  wheat,  he  will 


48  PLAN  OF  SOCIAL  WEALTH.  PART  I. 

soon  discover  that  lie  has  committed  an  error  ,because  cloths 
differ  in  their  degree  of  value,  and  hence,  the  producer 
of  wheat  would  take  only  the  best.  So  of  sugar  and 
coffee  ;  they  both  vary  in  quality  and  cost,  so  that  no 
measurement  of  their  magnitude  or  weight  can  indicate  cor- 
rectly the  quantity  of  value  they  possess.  Value  is 
imponderable,  intangible,  immaterial.  Its  quantity  bears 
no  uniform  relation  to  either  the  weight  or  the  size  of  the 
product  with  which  it  happens  to  be  incorporated.  There 
is,  for  example,  more  value  in  an  ounce  of  silver  than  in  a 
pound  of  iron,  more  in  one  bushel  of  wheat  than  in  two 
bushels  of  oats,  and  more  in  an  inch  of  ribbon  than  in  a 
yard  of  tape.  How  then  should  the  merchant  determine 
the  quantity  of  this  intangible,  imponderable,  yet  essen- 
tial portion  of  commodities  1  He  had  no  means  at  his 
command  other  than  to  observe  first  the  indications  of 
supply  and  demand,  and  then  to  base  upon  these  an  es- 
timate of  the  relative  value  that  a  given  quantity  of  each 
variety  of  each  class  of  products  bears  to  a  given  quan- 
tity of  any  and  every  other  variety  and  class  of  pro- 
ducts. This  estimate  would  be,  at  best,  but  a  blind 
effort  to  discover  the  true  quantity  of  value.  To  per- 
form the  mental  labor  of  making  it,  even  imperfectly, 
would  be  a  task  of  immense  magnitude  and  difficulty ; 
to  do  it  with  any  degree  of  certainty,  would  be  utterly 
impossible  ;  and  yet,  before  the  intervention  of  a  mea- 
sure of  value  in  some  form,  commerce  possessed  no  other 
means  of  ascertaining  its  true  quantity.  In  the  case 
we  have  supposed,  the  merchant  was,  therefore,  com- 
pelled to  estimate,  in  the  manner  just  pointed  out, 
not  only  the  relative  value  of  wheat,  sugar,  coffee 
and  cloth,  but  the  proportion  that  the  value  of  one 
pound  of  each  variety  of  his  sugar  and  of  his  coffee,  and 
one  yard  of  each  quality  of  his  cloth,  respectively  bore 


CHAP.  II.  PLAN  OF    SOCIAL  WEALTH.  49 

to  the  value  of  one  bushel  of  a  particular  quality  of 
wheat.  When  another  customer  presented  a  different 
product  for  exchange,  a  similar  estimate  as  to  the  rela- 
tine  value  of  that  and  the  various  commodities  asked 
for,  would  then  be  required,  and  so  on  through  the 
whole  circle  of  valuable  products. 

Such  must  have  been  the  first  great  obstacle  encoun- 
tered by  the  votaries  of  commerce,  in  their  efforts  to 
prosecute  it  with  the  incomplete  machinery  at  their  com- 
mand. They  could  only  remove  the  difficulty  by  mea- 
suring value,  and  how  were  they  to  provide  means  for 
measuring  a  thing  so  intangible — an  immateriality  ? 
The  effort  would  seem  to  be  hopeless  ;  and  it  must  be 
admitted  that  the  intellectual  faculties  were  never  more 
nearly  driven  to  the  wall,  for  they  have  not,  to  the  pres- 
ent day,  discovered  a  method  whereby  value  may  be 
correctly  measured  ;  but  they  have  made  a  near  approach 
to  it,  as  we  shall  see  presently. 

It  was  obvious  that  instruments  purely  material  were 
not  competent  to  measure  immateriality,  and  hence  the 
unavoidable  conclusion,  that  the  only  way  in  which 
the  quantity  of  value  could  be  determined,  would 
be  to  measure  it  by  itself;  i.  e.,  to  measure  the 
value  of  one  product  by  comparing  it  with  that  of 
one  or  more  others.  We  have  just  seen  that  to  make 
this  comparison  of  the  value  of  each  separate  product 
with  that  of  all  other  products,  would  be  so  labori- 
ous and  so  uncertain  in  its  results,  that,  if  adopted 
as  the  method,  it  would  neutralize  in  a  great  mea- 
sure, the  benefits  of  commerce.  Hence  the  absolute 
necessity  of  some  more  direct  and  certain  rule  by 
which  to  determine  the  quantity  of  value. — The  re- 
medy first  devised  we  may  .suppose  to  have  been,  the 
selection  and  adoption  of  a  single  product  of  value  (as 
5* 


50  PLAN    OF  SOCIAL  WEALTH.  PART  1. 

nearly  as  possible  invariable  in  cost  of  production  and 
in  quality,)  as  a  standard  by  which  the  value  of  all  other 
products  might  be  compared,  and  thus  measured.     We 
will  assume  wheat  to  have  been  selected  as  the  standard, 
and  a  bushel  of  that  product  as  the  quantity  of  value  to 
stand  as  the  unit  of  comparison.     This  contrivance  en- 
abled the  parties,  in  every  act  of  exchange,  not  only  to 
compare  the  estimated  value  of  the  products  belonging 
to  each  with  the  value  of  a  bushel  of  wheat,  but  to 
express  the  quantity  of  value  in  numerical  language. 
The  merchant,  for  example,  would  express  the  value  of 
a  pound  of  the  various  qualities  of  his  tea,  in  centesimal 
parts  of  the  value  of  the  standard  unit,  thus  :  .25,  .50, 
.75  ;  or  if  of  greater  value  than  the  unit,  thus  :  1.50,  2, 
3,  and  so  on ;  and  he  would  adopt  the  same  definitive 
language  in   naming  the  amount  of  value  belonging  to 
a  given  quantity  of  any  other  product. 

This  method  avoided  the  immense  mental  labor,  and 
the  uncertain  results,  inseparably  connected  with  the 
plan  of  estimating  the  value  of  each  separate  product 
by  comparing  it  with  the  respective  values  of  every 
other  kind  of  product.  It  established,  in  truth,  a  mea- 
sure of  value,  albeit  imperfect,  but  none  better  has  been 
discovered  to  the  present  day. 

By  this  method,  the  estimated  relative  value  of  all 
products  mights  be  readily  computed,  and  their  exchange 
consummated  without  the  intervention  of  the  wheat, 
just  as  we  now  witness  the  direct  exchange  of  one  pro- 
duct for  one  or  more  others,  by  merely  computing  the 
value  of  each  in  dollars  and  cents.  It  must  have  been 
soon  perceived,  however,  that  barter,  or  the  direct  ex- 
change of  one  product  for  another,  was  a  very  expensive 
and  imperfect  method  of  effecting  exchanges.  It  not 
only  compelled  products  to  taken  a  very  circuitous 


CHAP.  II.  PLAN    OF    SOCIAL    WEALTH.  51 

route  in  travelling  from   producers  to  consumers,   but 
it  confined  the  division  of  employments  mainly  within 
the    narrow    limits    of    producing   finished    objects   of 
desire,  and  thus  prevented  the  development  of  manufac- 
turing arts  as  a  distinct  division  of  production.     The 
method  of  barter  required  every  merchant  to  keep  a  sort 
of  bazaar  in  which  would  be  found  a  portion  of  each  of 
the  varied  commodities  of  the  world,  and  to  be  willing 
to  give  any  one  or  more  of  them  in  exchange  for  an 
equivalent  of  any  other.     This  task  must  have  been  dif- 
ficult if  not  impossible  for  individual  merchants  to  ac- 
complish, and  if  they  succeeded,  it  must  have  been  at  a 
prodigious   expenditure   of   industry   and    capital,   for 
which  they  had  to  be  reimbursed  by  the  receipt  of  com- 
missions  correspondingly   high.     It  was   therefore  but 
imperfectly  that  even  finished  objects  of  desire  were  ex- 
changed by  this  method ;  while  it  must  have  been  found, 
very  often,  altogether  inadequate  as  a  means  of  exchang- 
ing values  which  had  not  received  their  perfect  forms. 
For  instance,  it  cannot  be  supposed  that  the  merchant 
was   able  to  keep  on  hand  the  incomplete  portions  of 
watches,  clock,  knives,  wagons,  ships,  and  of  all  other  ma- 
chines, as  well  as  the  finished  machines  themselves  ;  and 
unless   he  did  so,  each  producer  of  value   must    have 
found  it  necessary  to  give  his   products  their  finished 
forms,   or  else  submit   to   a  series  of  unprofitable  ex- 
changes, perhaps   even   more  adverse  to  gain.     Beside 
these  illustrations  which  apply  to  commerce  in  its  nar- 
rower sense,  there   are  many  other  transactions  of  life 
that  properly   belong    to    the    commercial   department 
of  production,  which  could   scarcely   be  consummated 
by  the  method  of  barter.     The   traveller,  for  instance, 
would    have    to    carry    with   him   a    great  variety  of 
commodities  to  meet  the  diversified  wants  of  his  journey, 


52  PLAN    OF    SOCIAL    WEALTH.  PART  I. 

and  even  then,  it  is  not  improbable  that  he  would  be 
on  some  occasions,  compelled  to  forego  his  dinner.  The 
owner  of  real  estate,  wishing  to  dispose  of  his  property 
and  to  change  his  residence,  would  be  likely  to  find  it 
about  as  practicable  to  take  with  him  his  houses  and  lands 
as  to  transfer  the  bulky  and  ponderous  articles  offered  him 
in  exchange.  In  short,  much  of  skill,  labor  and  capital 
must  have  been  consumed  in  making  exchanges  by  the 
awkward  and  imperfect  method  of  giving  one  surplus 
product  for  another,  while  the  products  themselves  were 
diminishing  in  value  by  the  corrosions  of  time.  There- 
fore, to  overcome  the  hindrances  to  a  free  and  profitable 
interchange  of  commodities,  something  more  was  requir- 
ed than  a  mere  standard  of  value  by  comparison  with 
with  which  the  relative  value  of  all  other  commodities 
might  be  ascertained.  In  order  to  avoid  the  me- 
thod of  barter,  it  was  found  necessary  to  have  an 
intermediate  agent  of  transfer.  Accordingly,  to  sub- 
serve this  purpose,  the  machine  called  Money  was  in- 
vented and  constructed. 

After  the  problem  of  measuring  value  had  been  solved 
by  the  conception  and  adoption  of  the  plan  just  describ- 
ed, the  invention  of  money  did  not  require  much  genius, 
nor  its  construction  much  skill,  nor  its  adoption  much 
judgment,  and  yet  it  has  proved  to  be  one  of  the  most 
important  and  efficient  of  all  the  machines  invented  and 
fashioned  by  mankind. 

The  invention  consisted  simply,  in  taking  the  standard 
of  value  and  using  it  in  the  two-fold  capacity  of  a 
measure  and  an  instrument  of  transfer, — that  is  to 
say,  the  recognised  standard  of  value,  by  comparison 
with  which  all  other  values  were  measured,  was  taken 
from  its  resting  place  and  made  to  perform  the  office 
not  only  of  measuring  values  but  of  transferring  them, 


CHAP.   II.  PLAN    OF    SOCIAL    WEALTH.  53 

by  being  given  in  exchange  for  them.  Instead,  of  re- 
maining passive  and  measuring  values  by  comparison, 
the  standard  was  thenceforward  required  to  change 
place  with  the  values  measured  by  it,  In  being  made 
to  perform  this  twofold  office,  it  was  transformed  into  a 
circulating  medium,  standing  ready,  everywhere,  to  mea- 
sure and  transfer  all  other  values  in  search  of  a  mar- 
ket. 

The  construction  of  this  machine,  like  that  of  most 
other  useful  inventions,  was  at  first  rude  and  imperfect ; 
for  history  informs  us  that  wheat,  iron,  oxen,  tobacco, 
and  many  other  things,  have,  in  their  turn,  been  used  as 
the  materials  of  money.  Wheat,  in  virtue  of  its  great 
uniformity  in  cost  and  in  quality,  answered  very  well 
for  a  standard  by  which  to  compare  values,  but 
from  its  great  weight  and  bulk  as  compared  with  its 
value,  it  has  been  found  altogether  unfit  to  be  used  as  an 
instrument  of  transfer.  That  office  requires  large  value 
in  small  compass  and  weight ;  a  material  that  is  hard, 
durable,  easily  measured  and  difficult  to  imitate.  Gold 
and  silver  have  been  found  to  possess  all  these  qualities, 
as  well  as  those  which  constitute  them  good  measures  of 
value,  and  hence  we  find,  that  the  commercial  world  has, 
with  great  unanimity,  adopted  them  as  the  materials  of 
money, — or  more  properly,  as  the  material  of  the  basis 
which  supports  the  superstructure  of  convertable  paper 
money.  There  can  be  little  doubt  that  these  are  the  best 
materials  which  have  yet  been  used  in  the  fabrication  of 
money,  in  the  present  imperfect  form  of  that  instrument — 
a  form  in  which  its  magnitude  is  made  to  depend  on  the 
cost  of  producing  it,  or  on  the  quantity  of  value  inherent 
in  its  material.  It  is  believed,  however,  that  this  attribute 
may  be  partially  if  not  wholly  dispensed  with,  by  add- 
ing another  section  to  the  plan  of  the  machine.  The 


54  PLAN    OF    SOCIAL    WEALTH.  PART  I. 

subject  will  be  discussed  in   a  subsequent  chapter,  to 
which  the  reader's  attention  is  specially  invited. 

Aided  by  this  mighty  auxiliary,  commerce  now  finds 
no  difficulty  in  either  measuring  or  transferring  values. 
Her  votaries  stand  ready  to  carry  the  interchange  of 
commodities  to  the  utmost  limits  of  profitable  circula- 
tion, except  where  hindrances  are  interposed  by  unjust  or 
absurd  legal  restrictions.  These,  however,  are  fast 
fading  away  before  a  more  enlightened  public  judgment, 
and  it  is  hoped  that  a  few  years  more  will  serve  to 
place  them  on  the  list  of  passed  errors. 

Thus  aided  by  commerce,  the  division  of  employments 
has  been  permitted  to  take  an  unlimited  range,  and  to 
adopt  whatever  subdivisions  the  sagacious  promptings  of 
personal  interest  have  deemed  proper  to  dictate.  By 
this  means,  industry  has  been  rendered  more  skilful, 
machinery  more  various  and  perfect,  land  more  fertile, 
and,  consequently,  wealth  more  abundant.  Commerce 
has  not  only  given  potent  aid  to  the  development  of 
wealth  by  facilitating  its  processes  and  increasing  their 
number,  but  it  has  completed  the  metamorphosis  which 
the  Social  Contract  projected  and  set  in  motion  ;  for,  in 
presenting  the  means  of  exchanging  values,  it  has  given 
to  the  previously  insulated  parcels  of  wealth  the  attribute 
of  interdependence,  whereby  they  are  all  linked  together, 
juul  in  a  measure  blended  into  a  single  mass.  It  has 
thus  changed  the  character  of  wealth  from  individual  to 
social,  and  thereby  rendered  the  transformation  com- 
plete. 

The  increased  development  of  wealth,  resulting  from 
the  social  expedients  named  hitherto,  betrayed  the  want 
of  another  section  to  render  the  plan  complete.  As  the 
aggregate  of  capital  augmented,  it  was  found  to  be  very 
unequally  distributed.  In  the  hands  of  those  who  were 


CHAP  II.  PLAN    OF   SOCIAL    WEALTH.  55 

skilful,  industrious  and  frugal,  and  who  Lad  withal  some 
capital  and  land   to  aid  them  at  the  commencement,  it 
accumulated  in  volumes  so  large  as  to  become  in  a  mea- 
sure unproductive,  while  those  destitute  of  these  advan- 
tages   were  without   either   capital  or  land  to  concur 
with  their  industry.     The  wealthy  had  more  capital  and 
land  than  they  could  profitably  employ  by  moans  of  their 
own  industry,  the  poor  had  less  than  their  industry  re- 
quired ;  consequently,  it  must  have  been  seen  that  much 
of  each  must  remain  idle  and   unproductive,  unless  this 
defect  in  the  plan  of  social  wealth  could  be  remedied, 
especially   since,  as  before   remarked,    the   four  prime 
agents  of  production  must  labor  in  concert  if  they  labor 
at  all.     How  should  this  new  difficulty  be   overcome  ? 
An  obvious   means   presented   itself — namely,   for   the 
wealthy  to  hire  the  industry  of  the  poor,  and  thus  set  in 
motion  the  surplus  productive  agency  belonging  to  each. 
This  remedy  was,  doubtless,  the  one  first  adopted,  but 
it  must  have  been  found  altogether  inadequate,  because 
the  successful  prosecution  of  many  of  the  arts  of  pro- 
duction requires  that  the  capital  concurring  should  be, 
during  the  process,  in  the  possession  and  under  the  ex- 
clusive control  of  the  proprietor  of  the  concurring  indus- 
try.    For    this  reason,  it  is  requisite  to   unrestrained 
production,  that  the  wealthy  sometimes  loan  their  capital 
and  land  to  the  poor,  as  well  as  that  the  poor  loan  their 
industry  to  the  rich.     In  the  one  case,  the  poor  retain 
possession  of  the  fountain  of  their  industry,  transferring 
to  the  wealthy,  for  an  equivalent,  merely  a  stipulated 
portion  of  its  services  ;  while  in  the  other  case,  the  rich 
transfer  to  the  poor,  for  the  time  agreed  upon,  not  only 
the  productive  service  of  their  capital  but  the   capital 
itself.      This   the   latter    might   neglect   or  refuse   to 
return,  and    there    were   no    existing   means   of   com- 


56  PLAN  OF  SOCIAL  WEALTH.  PART  I. 

pulsion.  For  any  tiling  we  have  yet  seen,  the 
right  of  property  did  not  extend  beyond  its  absolute 
possession.  The  powers  of  government  were  competent 
to  prevent  and  punish  acts  of  spoliation,  but  it  had  no 
authority  to  aid  men  in  recovering  that  which  they  had 
voluntarily  surrendered  to  others.  The  temporary 
transfer  of  property,  was,  clearly,  the  only  method 
whereby  surplus  industry,  capital  and  land  could  be 
fully  and  effectively  employed ;  and  in  view  of  that  fact, 
it  was  resolved  to  devise  a  plan  for  securing  its  return  to 
its  proprietors.  In  execution  of  this  purpose,  the  gov- 
ernment machine  was  so  enlarged  as  to  recognise  and 
enforce,  and  thereby  establish,  a  new  right,  which,  for 
want  of  a  better  name,  has  been  called  the  right  of  pro- 
perty in  actions.  This  right  consists  in  the  recognition 
and  enforcement  of  the  obligation  of  contracts.  In  other 
language,  the  government  machine  was  so  enlarged  as  to 
recognise  as  property  the  bare  promises  of  men  to  deliver 
it  at  a  stipulated  period,  and  to  enforce  the  fulfilment  of 
these  promises,  thus  establishing  the  right  of  what  may 
be  termed  representative  property. 

This  additional  section  of  the  government  machine  has 
been  appropriately  named,  the  Credit  System.  Credits, 
based  upon  capability  and  integrity  of  purpose,  and 
prompted  by  the  desire  of  gain,  nn^st  have  prevailed  be- 
fore the  adoption  of  this  system  ;  but  in  the  earlier 
ages,  when  the  moral  sentiments  and  intellectual  facul- 
ties of  man  were  more  subject  to  his  animal  propensi- 
ties than  they  now  are,  credit,  thus  based,  was  doubtless 
confined  to  limits  of  the  narrowest  kind.  It  was  suffi- 
cient, however,  to  give  a  foretaste  of  its  advantages, 
whence  mankind  were  induced  to  adopt  the  social  device 
just  named,  with  the  view  of  enlarging  its  boundaries. 

Credit  is  a  most  effective  expedient  in  the  production 


CHAP.  II.  PLAN   OF    SOCIAL    WEALTH.  57 

of  wealth.  It  unites  the  surplus  capital  and  land 
of  the  wealthy  with  the  surplus  skill  and  labor 
of  the  poor,  thus  enabling  the  four  to  serve  in  con- 
cert in  the  production  of  value,  while  it  secures  to  their 
respective  proprietors  equitable  portions  of  the  revenue. 
It  thus  not  only  removes  an  obstacle  to  production,  but 
supplies  a  motive  which  prompts  to  action  the  productive 
powers  of  these  otherwise  idle  agents.  The  social 
machinery  by  which  the  right  of  property  in  actions 
was  established  and  the  obligation  of  contracts  enforced, 
greatly  enlarged  the  limits  of  credit,  and,  in  perhaps  an 
equal  degree,  its  productive  capabilities  ;  but  the  injuries 
inflicted  by  the  legalization  of  credits  are  also  great, 
and  it  may  well  be  doubted  whether  mankind  are,  after 
all,  really  gainers  by  this  extraordinary  enlargement  of 
the  province  and  machinery  of  government.  The  sub- 
ject will  be  examined  in  a  subsequent  chapter,  with  the 
view  of  resolving  this  problem. 

Such  is  an  imperfect  outline  of  the  nature  of  wealth, 
of  the  prime  sources  whence  it  emanates,  and  of 
the  social  plan  which-  the  more  enlightened  divi- 
sion of  mankind  have  devised  and  established  for 
for  the  purpose  of  promoting  its  development  and  guard- 
ing it  from  violence.  All  other  means  employed,  or  in- 
struments used,  in  the  diversified  processes  of  production, 
are  either  free,  unappropriated  agsnts,  or  else  special  in 
their  design  and  application,  being  intended  to  promote 
some  specific  operation  in  a  given  art.  These  last  may  be 
regarded  as  constituting  the  elementary  principles  of  the 
various  arts  of  production,  and  hence,  dissertations  on 
them  do  not  come  within  the  province  of  a  work  on 
this  science,  but  belong  properly  to  treatises  on  the 
arts  of  production  to  which  they  respectively  relate. 
The  arts  of  production  may  be  regarded  as  the  instru- 
6 


58  PLAN    OF    SOCIAL    WEALTH.  PART  I. 

mentalities  with  which  individuals  have  wrought  out  the 
superstructure  of  social  wealth,  in  conformity  with  the 
outlines  and  plan  indicated  by  science  and  established 
by  society.  Science  indicated  the  outlines,  society 
adopted  the  plan,  nature  furnished  the  materials,  indi- 
viduals and  the  arts  performed  the  work.  Skill,  labor, 
land,  and  capital  in  the  infinite  variety  of  its  ingeniously 
devised  forms,  are  the  productive  forces  subject  to  the 
control  of  individuals  ;  the  right  of  property,  especially 
in  land,  commerce,  money  and  credit,  afford  the  means 
of  employing  them  advantageously,  and  of  preserving 
their  fruits. 


Libra 


CHAPTER  III. 

OF  THE  NATURAL  LAWS 

WHICH    GOVERN     THE    PRODUCTION,    DISTRIBUTION,    AND 
CONSUMPTION    OF    WEALTH. 

General  remarks. 

Having  shown  the  origin,  design,  and  nature  of  wealth, 
and  having  explained  the  nature  and  attributes  of  the 
social  plan  established  by  a  portion  of  mankind  for  the 
purpose  of  facilitating  its  creation,  we  are  now  prepared 
to  trace  out,  understandingly,  the  principles  which  gov- 
ern its  production,  distribution  and  consumption.  This 
is  no  holiday  task.  Commerce  and  money  have  so  inter- 
woven these  principles  with  the  fabric  of  social  wealth, 
that,  to  evolve  them  with  clearness  and  method,  it  is  re- 
quisite the  effort  should  be  accompanied  with  a  much  high- 
er order  of  analytical  powers,  a  more  practiced  pen,  and  a 
clearer  knowledge  of  the  subject,  than  I  claim  to  pos- 
sess ;  but  I  hope,  nevertheless,  to  furnish  hints  which 
may  serve  to  point  out  the  way  to  those  who  are  better 
qualified  for  executing  the  task. 

In  order  that  the  reader  may  be  apprised  of  my  ob- 
ject, and  thus  the  more  readily  apprehend  the  drift  of 
my  arguments,  it  is  deemed  proper  to  state  first,  in  the 
form  of  general  propositions,  the  truths  which  this  chap- 
ter is  designed  to  unfold.  It  will  be  shown  : 

1,  That  self-interest  governs  the  production  and  dis- 
tribution of  wealth,  the  desire  of  happiness  its  con- 
sumption ;  that,  considered  in  the  aggregate,  the  desire 
of  happiness,  under  the  guidance  of  the  intellect  and  the 


60  LAWS    OF   TRADE.  PART  I. 

various  degrees  of  restraint  imposed  by  the  limitation  of 
means,  indicates  the  character  and  relative  quantities  of 
the  products  desired,  thus  controlling  the  demand  ;  and 
that  the  self-interest  of  mankind  so  directs  the  employ- 
ment of  the  productive  forces  that  each  object  of  desire 
is  produced  in  quantities  exactly  corresponding  with  the 
permitted  demand  for  it,  thus  controlling  the  supply. 

2,  That  the  quantity  of  true  value  inherent  in  any 
given  product,  is  not  only  equal  to,  but   identical  with, 
the  quantity  of  productive  service  incorporated  with  it ; 
that  the  market  value  is  sometimes  greater  than  the  true 
value   and  sometimes   less,   but   if  measured   at   their 
mean  the  two  are  equal  in  quantity  ;  and  that,  although 
the  money  value  or  market  price  rarely   coincides  with 
either  the  true  value  or  the  market  value,  yet  when  re- 
duced to  its  average  and   thus  measured,   the   quantity 
does  not  vary  from   that  of  either.     Estimated  in  the 
aggregate  and  regarded  as  units,    the  true  value,   the 
market  value  and  the  money  value  of  products,    or  of 
any  given  product,  are  absolute  equivalents. 

3,  That  value  is  made  up  of  two  well  defined  but  un- 
equal parts — namely,  cost  of  production  and  profits. 

4,  That  the  proprietors  of  the  aggregate  of  skill,  of 
labor,  of  capital,  and  of  land,   respectively  receive  one 
quarter  of  the  gross    profits   of  production,   the   whole 
being  divided  into   four   equal  shares ;  and  hence,    the 
greater  the  aggregate  quantity  of  either  one  of  the  pro- 
ductive forces,   as  compared  with  the  other  three,  the 
lower  will  be  the  relative  profits  of  its  individual  pro- 
prietors, and  vice  versa. 

5,  That  land,  aside  from  its  meliorations,   does   not 
possess  real  value — its  market  value  and  money  value 
being  merely  the  legalized  reflection  of  the  capital  placed  - 
upon  it  5  and   therefore,  that  the   market   value  of  the 


CHAP.   III.  LAWS    OF    TRADE.  61 

aggregate  of  land  (independent  of  meliorations)  is  pre- 
cisely equal  to  that  of  the  aggregate  of  productive  ca- 
pital. 

6,  That  the  profits  of  production  vary,  inversely  with 
the   market  value  of  land  ;  when  the  one  is  high,  the 
other  will  be  correspondingly  low. 

7,  That  the  profits   of  production,  whether  considered 
in  detail  or  unity,   vibrate  about  a  common  standard ; 
and  that  this  standard  itself  oscillates  about  a  fixed  cen- 
tre, which  is  believed  to  be  about  five  per  cent,   per  an- 
num on  the  value  of  the  productive  forces  employed. 

8,  That  the  portion  of  value  constituting  the  cost  of 
production  returns  to  the  sources  whence  it  emanates, 
and  is  there  consumed  in   the  preservation  and  repro- 
duction of  skill,  labor,  capital,  government  and  money  ; 
that  the  portion  constituting  the  profits,   is   applied,  in 
part  to  the  augmentation  of  skill,  labor  and  capital,  and 
the  balance  to  the  gratification  of  the  non-essential  de- 
sires of  its  owners, — the  productive  forces  now   existing 
being   the   accumulated  profits  of  the  present  and  all 
preceding  generations. 

9,  That  the  profits  of  production  in  the  aggregate, 
vibrate  within  the  range  of  2^  to  T|-  per  cent,   per  an- 
num, being  not  only  restrained  from   transcending  these 
limits  by  starvation  on  the  one  side,   and  by  a  dense 
crowd  of  liberated  desires  on  the  other,  but  also,  driven 
back  towards  the  centre  by  the  undue  consumption  of 
capital  at  the   one  extreme,   and  of  population  at  the 
other. 

These  propositions  present,  in  a  condensed  form,  the 
leading  features  of  what  have  been  appropriately  named 
the  Natural  Laws  of  Trade.  The  present  chapter,  as 
already  stated,  is  an  attempt  to  unfold  this  portion  of 
nature's  code ;  and  the  discussions  it  will  embrace  are 
6* 


62  LAWS    OF    TRADE,  PART  I. 

designed  to  demonstrate  the  truths  and  fill  up  the  out- 
lines presented  in  the  foregoing  propositions.  With  the 
view  of  simplifying  the  subject  as  far  as  possible,  and  in 
deference  to  precedent,  I  shall  prosecute  the  inquiry  un- 
der three  separate  heads,  namely,  Production,  Distribu- 
tion, and  Consumption ;  but  I  must  in  candor  say,  that 
the  three  classes  of  laws  are  so  woven  together  and  in- 
terlinked, that  my  powers  of  analysis  are  not  equal  to 
the  effort  of  separating  them  perfectly  and  clearly. 

It  may  be  well  to  premise  that  the  reasoning  of  this 
chapter  is  based  on  the  assumption,  that  government  in- 
terposes no  hindrances  to  obstruct  the  paths  of  produc- 
tion,— such,  for  example,  as  monopolies,  duties,  bounties 
and  usury  laws — but  confines  itself  to  the  exercise  of  its 
legitimate  functions  :  namely,  to  the  protection  of  life, 
liberty  and  personal  faculties  ;  to  the  protection  of  va- 
lue ;  to  the  creation  and  protection  of  legal  value  in 
land  ;  to  facilitating  the  operations  of  commerce  by  es- 
tablishing uniform  standards  of  weights,  measures  and 
money,  together  with  simple  and  concise  rules  for  the 
government  of  parties  exchanging  products  at  the 
instant  of  transfer  ;  and  to  the  protection  of  representa- 
tive value,  by  enforcing  the  obligation  of  contracts. 
With  these  explanations,  I  will  now  proceed  to  the  inves- 
tigation of  the  highly  important  and  recondite  principles 
involved  ip  the  subject  presented. 


SECTION    I. 

Of  Production. 

In  treating  of  the  nature  and  plan  of  social  wealth, 
I  confined  my  inquiry  into  the  laws  of  human  nature,  & 
that  portion  of  them  with  which  we  were  then  concerned, 


CHAP.  III.         AS  INFLUENCING  PRODUCTION.  63 

and  which  were  mainly  social  in  their  character  and  ten- 
dencies. The  general  expedients  and  machinery  which  per- 
mit and  facilitate  the  creation  of  value,  being  adopted  by 
the  social  body  for  the  purpose  of  benefiting  its  different 
members,  it  was  not  necessary,  nor  even  proper,  that  other 
than  social  motives  and  actions  should  be  brought  in  re- 
view, while  tracing  out  their  origin,  nature  and  design. 
But  now,  when  we  are  about  to  consider  the  phenomena 
which  have  resulted  from  this  social  plan,  and  to  trace 
the  natural  laws  which  govern  the  production,  distribu- 
tion and  consumption  of  wealth,  it  is  necessary  that  we 
look  upon  mankind  as  individuals,  as  well  as  members 
of  society,  and  that  we  scan  closely  their  motives  and  ac- 
tions as  such. 

Before  the  intervention  of  commerce  and  money,  when 
each  proprietor  consumed  the  identical  value  produced 
by  the  service  of  his  own  agents,  every  one  must  have 
been  impelled,  by  his  desire  of  happiness,  to  employ  his 
productive  forces  in  the  creation  of  such  objects  of  his 
own  wants  and  desires  as  his  judgment  indicated  as  the 
best  adapted  to  promote  that  end.  This  sort  of  produc- 
tion required,  in  the  choice  of  pursuits,  no  other  exer- 
cise of  judgment  than  that  now  required  in  making  pur- 
chases for  direct  consumption  ;  the  two  cases  are 
precisely  analogous.  The  desire  of  happiness,  guided 
by  the  understanding,  was  then  the  governing  principle 
of  production,  as  it  still  is  of  consumption.  But  when, 
by  means  of  commerce  and  money,  individual  wealth 
was  transformed  into  social  wealth — when  the  insulated 
parcels  of  value,  in  all  its  varied  forms,  were  so  blended 
as  to  constitute  as  it  were  a  single  mass,  out  of  which 
each  contributor  might  select  his  portion  in  the  form  best 
adapted  to  his  individual  wants — the  case  was  widely 
different.  It  then  became  expedient  for  producers  to 


{34  LAWS    OF    TRADE,  PART  I. 

be  guided,  in  the  employment  of  their  agents,  by  the 
aggregate  of  human  wants  rather  than  by  their  own, 
since,  by  exchanging  equal  values,  they  could  thus  more 
successfully  procure  the  ultimate  objects  of  desire  than 
by  the  direct  method  of  employing  their  own  agents  in 
their  production.  This  system  required  a  very  different 
exercise  of  judgment  from  that  which  preceded  it,  and, 
as  we  shall  see  presently,  it  necessarily  called  into  being 
a,  new  form  of  the  selfish  principle,  to  stand  between  the 
desire  of  happiness  and  that  portion  of  the  objects  of 
desire  which  are  rendered  such  by  artificial  means,  for 
the  purpose  of  aiding  the  former  in  the  procurement  of 
the  latter.  This  principle  is  called  Self  Interest. 

I  have  shown  that  when  value  became  subject  to  ex- 
change, it  was  essential  that  means  should  be  devised  for 
determining  its  quantity,  as  without  some  knowledge  of 
that,  commerce  could  not  perform  its  office.  I  have  also 
shown  that  the  skill  and  labor  of  mankind,  the  auxiliary 
machines  which  they  have  fashioned,  and  the  natural 
utility  that  they  have  appropriated,  are  the  sources 
whence  all  value  emanates  ; — that  it  is  the  joint  service 
of  these  sources,  blended  into  compound  streams  and 
incorporated  with  natural  products  in  such  ways  as  to 
augment  their  utility,  which  imparts  to  those  products 
the  attribute,  value.  From  these  premises  results  the 
legitimate — nay,  unavoidable  inference,  that  the  quan- 
tity of  value  in  any  given  product  is  not  only  equal  to, 
but- identical  with,  the  quantity  of  productive  service  in- 
corporated with  it.  This  may,  indeed,  be  regarded  as 
an  unerring  rule  for  determining  the  quantity  of  true 
value  inhering  in  commodities,  because  self  interest 
never  fails  to  direct  producers  to  employ  their  produc- 
tive forces  in  such  methods  as  they  believe  will  net 
them,  ultimately,  the  largest  amount  of  utility. 


CHAP.  III.         AS  INFLUENCING  PRODUCTION.  65 

Now  let  us  for  the  present  assume,  that  when  the  ex- 
pedient, commerce,  was  first  adopted,  means  were  pro- 
vided for  measuring  value  correctly,  and  that  the  law 
required  every  exchange  to  be  made  in  absolute  equiva- 
lents, i.  e.,  in  equal  quantities  of  true  value.  Under  this 
arrangement,  every  producer,  as  a  matter  of  course,  set 
about  the  creation  of  value  in  the  form  deemed  best 
adapted  to  the  nature  and  circumstances  of  his  produc- 
tive powers  ;  for  he  knew,  in  the  first  place,  that  he 
could  thus  produce  the  largest  quantity  of  value,  and  in 
the  next  place,  that  he  could  contribute  it  to  the  mass 
of  social  wealth  and  take  thence  a  true  equivalent  in 
whatever  form  his  desire  of  happiness  chanced  to  dictate. 
With  production  governed  by  this  rule,  and  consumption 
governed  as  it  now  is  and  as  it  must  have  been  then,  by 
the  desire  of  happiness,  subject  however  to  such  restraints 
as  were  imposed  by  the  intellect  and  by  the  limitation 
of  means  to  secure  its  objects,  we  may  readily  perceive 
that  the  mass  of  social  wealth  could  not  long  have  main- 
tained a  form  corresponding  with  the  wants  and  desires 
it  was  designed  to  satisfy.  The  production  of  some  ob- 
jects must  have  exceeded  the  liberated  desires  for  them, 
while  that  of  others  fell  short — for  I  hold  it  to  be  impos- 
sible for  the  adaptation  of  the  productive  forces  and  the 
relative  urgency  of  liberated  desires  to  so  coincide  in 
strength  as  to  produce  an  equilibrium  in  the  supply  of, 
and  demand  for,  even  any  one  class  of  objects,  much  less 
for  all — and  yet,  unless  this  actually  occurred  in  all, 
some  products  must  have  been  placed  in  the  lap  of  com- 
merce in  superabundance,  with  the  surplus  to  be  consumed 
by  time,  while  others  were  either  entirely  withheld  or 
furnished  in  quantities  but  partially  sufficient  to  satisfy 
the  liberated  desires  for  them  ; — for  we  may  safely  as- 
sume, that  no  producer  would  contribute  to  commerce 


66  LAWS    OF    TRADE,  PART  I. 

objects  which  he  needed  more,  for  the  sake  of  taking 
thence  merely  a  true  equivalent  of  those  he  needed  less. 
In  illustration,  we  will  suppose  that  an  undue  portion  of 
mankind,  finding  their  powers  better  adapted  to  the  pro- 
duction of  wheat  than  to  that  of  any  other  object  of 
desire,  and  knowing  the  high  degree  of  utility  pertain- 
ing to  that  product,  directed  their  efforts  to  the  creation 
of  value  in  that  form.  This  caused  an  undue  enlarge- 
ment of  the  wheat  portion  of  the  mass  of  social  wealth, 
and,  as  an  unavoidable  consequence,  as  will  be  shown 
presently,  a  corresponding  diminution  of  some  other 
portion  or  portions,  say  sugar  and  cotton ;  in  other 
words,  the  production  of  wheat  exceeded  the  liberated 
desire  for  it,  the  production  of  sugar  and  cotton  fell 
short  of  the  liberated  desires  for  them.  Now,  if  a 
bushel  of  wheat,  ten  pounds  of  sugar  and  ten  pounds  of 
cotton,  of  given  qualities,  were  known  to  embody,  respect- 
ively, equal  quantities  of  productive  service,  and  were 
always  exchanged  in  true  equivalents,  it  is  apparent 
that  the  case  we  have  supposed  would  soon  divest  the 
floating  mass  of  social  wealth  of  its  sugar  and  cotton 
portions,  while  it  would  uselessly  augment  its  wheat 
portion.  And,  under  the  rule  assumed,  similar  dispro- 
portions between  ail  classes  of  liberated  desires  and  their 
respective  objects  must  have  been  produced  and  perpe- 
tuated, because  the  system  presents  no  compensating 
power  capable  of  preserving  or  restoring  the  equilibrium. 
In  a  word,  that  system  would  destroy  either  commerce 
or  its  utility,  for  if  prosecuted  under  it,  the  evils  re- 
sulting would  greatly  exceed  the  benefits. 

In  point  of  fact,  no  perfect  measure  of  the  true  value 
of  products  ever  has  been,  or  can  be,  provided  ;  but 
some  governments  have,  nevertheless,  so  far  erred  in 
their  policy  as  to  require  the  exchange  of  certain  pro- 


CHAP.  III.         AS  INFLUENCING  PRODUCTION.  67 

ducts  to  be  made  in  what  they  assumed  to  be  true  equi- 
valents. The  legislators  of  France,  for  instance,  about 
the  beginning  of  the  present  century  attempted  to  es- 
tablish legal  prices  for  bread  and  flour ;  and  they  soon 
realized  the  fruits  of  their  folly  in  the  aggravation  of  the 
evil  they  were  attempting  to  remedy.  They  fixed  the 
legal  value  too  low  and  it  banished  the  products.  If 
they  had  put  it  too  high,  and  made  it  permanent,  most 
of  the  wealth  of  that  nation  would  have  been  long  since 
converted  into  bread  and  flour.  Provided  with  means  to 
determine  the  true  value,  their  attempt  would  have  been 
worse  than  nugatory ;  with  no  better  measure  than  that 
afforded  by  money,  and  especially  such  vile  money  as 
France  possessed  at  that  time,  the  act  savors  of  madness. 

If,  then,  the  true  value  of  products  cannot  be  ascer- 
tained with  precision,  nor  their  exchanges  made  with  ad- 
vantage under  the  rule  of  invariable  equivalents,  even 
with  the  aid  of  a  perfect  measure,  how,  and  by  what 
rule,  is  commerce  governed  in  the  exchange  of  values  ? 
How  is  the  equality  of  liberated  desires  and  their  res- 
pective objects  maintained  7  Where  is  the  great  balance 
wheel  which  preserves,  in  relation  to  each  product,  as 
well  as  to  the  whole  mass  of  social  wealth,  the  equation 
of  supply  and  demand?  Let  us  remove  the  assumed 
restriction  and  we  shall  soon  see. 

Instead  of  attempting  to  enforce  the  impracticable 
rule  we  have  been  considering,  the  founders  of  com- 
merce, after  having  provided  the  best  measure  of  value 
at  their  command,  gave  to  the  parties  of  every  act  of 
exchange  perfect  freedom  to  determine  for  and  between 
themselves  what  quantity  of  their  respective  products 
constituted  equivalents,  and  in  the  event  of  mutual 
agreement,  to  make  exchanges  accordingly.  Men  were 
thus  permitted  to  take  greater  value  in  exchange  for 


68  LAWS     OF    TRADE,  PART  I. 

less,  provided  they  could  find   others  willing  to  give  it  ; 
or  to  give  more  for  less  if  they  so  desired. 

Such  is  the  rule  by  which  commerce  determines  equi- 
valents. In  its  adoption  originated  the  necessity  of  a 
modified  form  of  the  selfish  principle  to  preside  over  the 
exchange  of  values  and  their  production,  so  directing 
both  as  to  secure  to  each  individual,  in  forms  adapted  to 
his  desires,  the  largest  possible  amount  of  utilit}^  that 
his  productive  forces  were  capable  of  yielding.  In 
obedience  to  the  necessity,  Self-interest  has  been  called 
into  being,  and  has  taken  her  place  as  the  presiding 
genius  not  only  of  commerce,  but  of  every  other  depart- 
ment of  production  ;  and  we  shall  find  that  she  so  rules, 
as  to  preserve,  with  admirable  uniformity,  the  equal- 
ness  of  liberated  desires  and  their  objects.  The  su- 
premacy of  this  principle  in  all  matters  relating  to  the 
production  and  distribution  of  wealth  is  so  universal  and 
invariable,  and  the  fact  so  notorious,  that  no  argument 
is  needed  to  demonstrate  either  its  existence  or  supre- 
macy :  if  not  self-evident  truths,  they  are  equally  well 
established  by  the  universal  experience  of  mankind. 
But  in  view  of  the  odium  cast  upon  this  principle  of  hu- 
man nature  by  means  of  blind  epithets  emanating  from 
prejudice  and  error,  it  may  be  well  to  say  that  it  is  just 
as  necessary  to  man  as  gravity  is  to  matter.  If,  in 
matter,  the  force  of  attraction  were  not  greater  than 
that  of  repulsion,  we  should  find  masses  and  particles 
repelling  each  other  until  all  things  returned  to  their 
original  atoms  or  ether.  So,  if  the  selfish  principle 
were  not  stronger  than  the  social,  if  men  were  not  more 
mindful  of  their  own  interest  than  of  the  interest  of 
others,  we  should  see  value  repelled  by  every  one,  and 
thus  utterly  destroyed,  and  with  it  the  human  race,  for 
I  have  shown  that  life  cannot  be  preserved  without  it. 


CtiAP.  III.         AS    INFLUENCING  PRODUCTION.  69 

It  was  for  a  wise  purpose,  therefore,  that  the  productive 
agents  and  the  value  created  by  their  services  were 
placed  under  the  control  and  direction  of  the  personal 
interest  of  their  individual  owners  ;  the  welfare  and 
even  the  existence  of  the  race  required  that  it  should 
be  so.  Nor  are  there  any  evils  resulting  from  the  con- 
trolling influence  of  self-interest,  provided  it  be  kept 
within  the  confines  of  justice,  and  thus  restrained  from 
the  commission  of  trespasses  on  the  rights  of  others. 
Unfortunately,  such  trespasses  often  occur,  notwith- 
standing the  threefold  restraint  existing  in  the  Divine 
law,  the  conscience,  and  the  laws  of  society.  They  are, 
however,  but  instances  of  the  undue  vibration  of  the 
principle  in  one  direction,  as  bankrupting  munificence 
and  improvidence  are  in  the  other. 

Let  us  now  see  what  direction  this  ruling  principle 
gives  to  the  productive  forces,  and  by  what  means  it 
keeps  the  supply  of  each  class  of  products  on  a  level 
with  the  demand  for  them. — We  will  suppose  that  when 
commerce  first  assumed  her  office  the  scientific  plan  of 
wealth  and  the  arts  of  production  were  both  so  imperfect, 
and  productive  capital  so  scarce,  that  mankind  were  able 
to  provide  for  no  more  than  the  first  three  circles  of  their 
wants — namely,  the  want  of  ft^d,  of  clothing,  and  of  |ene- 
ments ;  that  in  obedience  to  the  invitations  of  commerce, 
they  divided  themselves  into  four  classes,  one  class  to  pro- 
duce food,  one  clothing,  one  tenements,  and  one  to  perform 
the  offices  of  commerce — each  individual  selecting  the  de- 
partment for  which  he  deemed  his  productive  forces  best 
adapted;  that  it  so  happened  that  the  requisite  numbers  en- 
tered into  commerce  and  into  the  production  of  tenements, 
but  too  many  into  the  production  of  clothing  and  too 
few  into  that  of  food,  so  that  there  was  more  of  the  one 
and   less  of  the   other   produced  than  their  respective 


4 


70  LAWS    OF    TRADE,  PART  I, 

liberated  desires  demanded.  The  commercial  class, 
acting  as  the  carriers  and  intermediate  agents  of  the 
other  three,  had  commenced,  we  will  suppose?  the  inter- 
change of  their  respective  products  on  the  system  of  true 
equivalents — as  nearly  as  these  could  be  ascertained, — 
distributing  the  commissions  charged  for  their  services 
equally  on  the  products  of  each.  But  perceiving  that 
the  supply  of  food  diminished  while  that  of  clothing  in- 
creased, the  merchants  must  have  soon  discovered  that 
they  had  committed  an  error, — that  they  should  have  es- 
timated equivalents  by  the  relative  intensity  of  the  de- 
sires for  the  respective  products,  as  indicated  by  demand, 
instead  of  being  guided  by  the  quantity  of  productive 
service  incorporated  with  them  ;  and  they  resolved  thence- 
forward to  be  governed  by  this  rule.  Accordingly,  they 
demanded  of  the  producers  of  clothing,  say  two  mea- 
sures of  true  value  in  that  form,  in  exchange  for  one 
measure  in  the  form  of  food;  and  the  latter  were  com- 
pelled to  accept  these  conditions,  since  they  could  not 
otherwise  quiet  the  imperative  urgency  of  appetite.  But 
it  at  once  aroused  their  sleepless  guardian,  Self-interest. 
She  pointed  out  to  them  the  undue  profits  of  the  pro- 
ducers of  food  and  the  corresponding  losses  of  their  own 
class,  and  directed  a  portion  of  them  to  transfer  their 
productive  forces  to  the  food  department.  The  order 
was  as  implicitly  obeyed  as  it  was  promptly  given — for 
all  men  yield  a  willing  obedience  to  the  dictates  of  self- 
interest — and  the  inevitable  consequence  was,  a  subse- 
quent excess  of  food  and  scarcity  of  clothing  ;  perceiv- 
ing which,  self-interest  called  back  a  portion  of  her 
votaries,  which  again  produced  clothing  in  excess  ;  and 
so  on,  with  lessening  vibrations,  until  the  equilibrium  was 
restored. — And  when,  by  reason  of  more  perfect  know- 
ledge in  the  science  and  arts  of  production,  or  from  other 


CHAP.  III.         AS  INFLUENCING  PRODUCTION.  71 

favoring  causes,  there  came  to  be  a  simultaneous  excess 
in  the  supply  of  food,  clothing,  tenements,  and  commer- 
cial machinery — when  the  liberated  desire  for  each  was 
fully  satisfied  without  consuming  the  whole  of  either 
class  of  objects — the  first  consequence  must  have  been 
the  liberation  of  the  next  outer  circle  of  desires  ;  the 
next,  a  demand  for  their  objects — a  demand  more  in- 
tense than  for  either  of  the  others,  because  of  the  rela- 
tive scarcity  of  these  ;  and  finally,  a  mandate  from  self- 
interest,  directing  a  portion  of  her  votaries  to  produce 
those  objects,  and  thus  equalize  the  intensity  of  supply 
and  demand.  When,  on  the  other  hand,  from  the  fee* 
bleness  of  production  or  other  adverse  causes,  the  demand 
for  all  classes  of  products  exceeded  their  supply,  the 
outer  circle  of  liberated  desires  was  driven  back  and 
again  chained  up.  Self-interest  then  concentrated  her 
forces,  and  directed  their  employment  in  the  production 
of  objects  adapted  to  the  satisfaction  of  the  more  im- 
perative desires,  which  still  remained  free,  thus  again 
equalizing  the  intensity  of  supply  and  demand.  In  other 
words,  when  production  augments,  it  enables  the  desire 
of  happiness  to  set  free  a  previously  enchained  circle  of 
desires  ;  these,  after  long  abstinence,  vehemently  de- 
mand their  objects,  perceiving  which,  self-interest  directs 
the  creation  of  a  new  class  of  products  adapted  to  their 
gratification.  When  production  diminishes,  the  outer 
circle  of  desires  and  its  corresponding  class  of  products, 
are,  in  the  same  manner,  suppressed.  Thus  self-inter- 
est not  only  keeps  the  supply  of  each  separate  class  of 
products  on  a  level  with  the  demand  for  it,  but  main- 
tains the  equation,  or  equalizes  the  intensity,  of  supply 
and  demand  as  it  relates  to  the  aggregate  of  wealth. 

We  find,  then,  that  the  market  value  of  products,  or 
commercial  equivalents,  are  determined — not  by  estima- 


72  LAWS    OF   TRADE,  PART  1, 

ting  the  quantity  of  productive  service  which  they 
respectively  embody,  but  by  the  relative  magnitude  of 
liberated  desires  and  their  existing  objects,  as  indicated  by 
supply  and  demand  at  the  time  the  exchange  is  made. 
For  example,  when  the  existing  quantity  of  food  and  the 
aggregate  liberated  desire  for  it  are  coincident — when 
the  supply  of  and  demand  for  food  are  of  equal  intensity 
— we  consider  the  desire  and  object  as  agreeing  in  mag- 
nitude ;  and  so  of  the  others.  So  long  as  this  equili- 
brium continues  to  exist,  commercial  equivalents  are  true 
equivalents.  But  when,  as  in  the  case  we  have  suppo- 
sed, the  supply  of  food  fell  short  of  the  demand  for  it, 
its  market  value  expanded,  which  expansion  lessened  the 
liberated  desire  by  increasing  the  difficulty  of  procuring 
its  object,  so  that  the  equality  of  the  two  was  preserved. 
The  market  value  of  the-  object  was  expanded  by  its 
scarcity,  the  liberated  desire  was  contracted  by  the  ex- 
pansion of  the  value,  until  they  met,  and  again  corres- 
ponded in  size,  at  a  point  somewhere  above  the  then  ex- 
isting magnitude  of  the  object,  and  below  the  natural 
magnitude  of  the  desire — perhaps  midway  between  the 
two.  In  virtue  of  the  same  causes,  the  excess  of  cloth- 
ing contracted  its  market  value  and  enlarged  the  desire 
for  it,  until  the  two  met  at  a  point  as  far  above  the  na- 
tural magnitude  of  the  desire  as  they  did  in  the  other 
case  below  it.  The  equation  of  supply  and  demand 
which  existed  in  reference  to  tenements,  left  the  market 
value  of  the  latter  coincident  with  their  true  value. — 
With  the  value  of  food  thus  expanded,  that  of  clothing 
thus  contracted,  and  that  of  tenements  in  its  natural 
state,  commerce  took  equal  volumes  of  each  and  called 
them  equivalents.  The  producers  of  tenements  were 
therefore  losers  in  their  exchanges  for  food  and  gainers 
in  their  exchanges  for  clothing ;  what  they  lost  by  the? 


CHAP.   III.  AS    INFLUENCING    PRODUCTION.  73 

expansion  of  value  in  the  one,  they  gained  by  its  con- 
traction in  the  other.  The  producers  of  food,  when  they 
exchanged  with  the  producers  of  tenements,  gave  a  mea- 
sure of  rarified  value  for  one  of  medium  density,  and 
when  they  exchanged  with  the  producers  of  clothing 
they  gave  a  rarified  value  for  an  equal  volume  of  a  con- 
densed one ;  hence,  they  were  gainers  and  the  producers 
of  clothing  losers.  The  expansion  of  the  market  value 
of  products  augments  the  profits  of  their  producers,  the 
contraction  diminishes  them ;  but  the  self-interest  of 
mankind  is  ever  on  the  alert,  and  constantly  shifting  the 
distribution  of  the  productive  forces  in  such  a  way  as  to 
transfer  the  pressure  from  compressed  to  expanded 
values,  so  that  the  market  value,  in  all  classes  of  pro- 
ducts, ultimately  arrives  at  the  point  of  natural  density  ; 
or  if  the  oscillations  continue,  in  any  given  case  the 
sum  of  its  expansions  exactly  equals  that  of  its  contrac- 
tions. Observation  seems  to  indicate  that  these  oscilla- 
tions are,  in  fact,  continuous  in  all  cases.  They  vary 
in  degree,  being  at  one  time  greater,  at  another  less,  but 
never  cease  entirely,  so  numerous  are  the  disturbing  causes, 
both  natural  and  artificial,  by  which  they  are  perpe- 
tuated. When,  for  example,  the  market  value  of  a 
given  product  has  been  expanded  by  an  under  supply, 
we  find  that  the  diminished  demand  and  the  increased 
supply  thereby  generated,  rarely  if  ever  fail  to  pro- 
duce a  corresponding  compression,  A  change  in  tastes, 
habits,  circumstances,  and  many  other  causes,  also  tend  to 
perpetuate  these  oscillations  by  affecting  the  market  value 
of  products.  But  amidst  them  all,  self-interest  never 
fails  to  maintain  her  supremacy.  Ever  true  to  her  of- 
fice, she  so  governs  the  employment  of  the  productive 
forces  that  the  supply  of  and  demand  for  each  and  every 
class  of  products  regularly  alternate  in  their  preponder- 
7* 


74  LAWS    OF    TRADE,  PART  I. 

ating  force  ;  so  that  their  market  value  contracts  and  ex- 
pands with  almost  as  much  uniformity  as  that  with  which 
the  pendulum  vibrates  when  searching  its  gravitating 
rest ;  and  like  that,  the  sum  of  its  variations  will  be  pre- 
cisely the  same  on  either  side  of  its  gravitating  centre. — 
From  these  premises  we  may  safely  infer,  that  although 
commercial  equivalents  are  rarely  if  ever  true  equiva- 
lents, yet,  if  considered  in  the  aggregate  and  measured 
.-it  its  average  density,  the  market  value  corresponds 
with  the  true  value ;  and  therefore,  in  the  aggregate 
commercial  equivalents  are  true  equivalents.  True  value 
is  of  invarible  density ;  market  value  expands  and  con- 
tracts, but  every  expansion  begets  a  subsequent  contrac- 
tion, every  contraction  a  subsequent  expansion,  so  that 
the  aggregate  of  the  one  exactly  equals  that  of  the  other. 
The  market  value  therefore,  if  taken  at  its  mean,  may 
be  regarded  as  identical  with  the  true  value,  and  the  best 
known  indicator  of  the  latter. 

Having  thus  pointed  out  the  basis  of  true  value  and 
of  market  value,  and  marked  the  features  in  which  they 
differ  ;  having  shown  that  the  latter  is  subject  to  alter- 
nate expansions  and  contractions,  and  that  commerce 
takes  equal  volumes  of  it  and  considers  them  commercial 
equivalents,  whatever  may  be  the  relative  density  of  the 
two  portions  exchanged ;  and  having  shown  that  the  de- 
gree of  expansion,  or  of  contraction,  is  ascertained  by 
the  relative  intensity  of  supply  and  demand  at  the  mo- 
ment the  exchange  is  made,  it  now  remains  to  be  shown 
in  what  manner  its  volume  is  measured.  Ability  to 
d  t  nn;ne  the  degree  in  which  value  is  expanded  or 
coi i tract-  d,  were  useless  knowledge,  unless  its  actual 
vo  unit1  could  be  ascertained,  or  at  least  approximate- 
ly determined  by  some  sort  of  measurement.  With- 
out a  knowledge  of  the  actual  volume,  as  well  as  of  the 


CHAr.  III.    AS  INFLUENCING  PRODUCTION.  75 

degrees  of  expansion  and  contraction,  commerce  would 
be  unable  to  determine  what  quantity  of  any  two  pro- 
ducts constitute,  at  the  moment  of  exchange,  commercial 
equivalents. 

I  have  already  shown  that  the  method  adopted  is,  the 
selection  of  a  product  of  value,  to  be  used  either  as  a 
standard  with  which  the  volume  of  other  values  may  be 
ascertained  by  comparison,  or  as  a  machine  by  which 
they  may  be  actually  measured,  and  also  transferred,  the 
machine  being  one  of  the  equivalents  in  each  act  of  ex- 
change. This  instrument  of  commerce  is  called  money. 
These  are  familiar  facts  ;  but  in  order  to  ascertain  the 
elements  of  money  value  or  market  price,  it  is  requisite 
that  we  also  know  with  what  degree  of  truthfulness  this 
instrument  performs  the  office  of  measuring  values.  To 
this  investigation  we  will  now  proceed. 

At  the  threshold,  we  are  met  by  a  prevalent  error 
which  so  obstructs  our  path  that  it  must  be  refuted  be- 
fore me  can  hope  to  make  much  progress.  The  doc- 
taine  has  been  taught,  ^and  generally  received  as  true, 
that  the  adoption  of  gold  and  silver  as  the  materials  of 
money  greatly  increased  their  value.  This  is  an  error. 
It  has  widened  the  sphere  of  their  utility,  but  in  nowise 
affected  the  amount  of  value  belonging  to  specific  quan- 
tities of  them  ;  unless,  indeed,  it  has  diminished  the 
amount,  for  according  to  the  general  maxim  of  pro- 
ducers, the  larger  the  quantity  demanded  the  cheaper 
the  rate  at  which  the  article  can  be  furnised. 
Before  their  adoption  as  the  materials  of  money, 
they  each  possessed  the  two  essential  elements  of  value, 
cost  of  production  and  utility.  In  the  form  of  plate  and 
in  other  devices,  they  served  to  gratify  a  clamorous  cir- 
cle of  human  desires.  They  were  called  for  to  the  ex- 
tent that  these  desires  possessed  the  means  of  securing 


76  LAWS    OF    TRADE,  PART  I. 

their  fruition,  and,  under  the  direction  of  self-interest, 
they  were  produced  to"  an  equal  extent — subject,  how- 
ever, like  all  other  products  of  value,  to  the  alternating 
preponderance  of  supply  and  demand.  In  these  forms, 
gold  and  silver  constitute  finished  objects  of  desire,  and 
they  are  consumed,  albeit  slowly,  by  the  identical  de- 
sires which  first  prompted  their  production.  But  their 
selection  and  adoption  as  the  materials  of  money,  gave 
birth  to  a  new  desire  for  them  in  the  form  of  coin.  In 
this  case,  the  desire  did  not  call  for  a  direct  object  of 
consumption,but  merely  for  an  intermediate  agent  capable 
of  aiding  it  in  obtaining  such  objects — in  a  word,  for  a 
productive  machine,  to  be  placed  as  an  additional  link  in 
the  circuit  which  connects  the  primitive  desires  with  their 
ultimate  objects,  and  which  aids  so  potently  in  bringing 
the  two  together.  This  new  desire  generated  an  addi- 
tional demand  for  gold  and  silver,  which  at  first  caused 
their  value  to  expand  ;  the  expansion  increased  the  sup- 
ply, which,  in  its  turn,  contracted  the  value,  so  that 
after  a  few  enlarged  expansions  and  contractions,  the 
market  value  of  gold  and  silver  returned  to  their  ordi- 
nary oscillations  about  the  point  of  natural  density, — 
the  only  ultimate  consequences  being  a  great  enlarge- 
ment of  their  sphere  of  usefulness,  and  a  corresponding 
augmentation  in  their  production. 

Either  one  of  these  metals  would  serve  as  the  exclu- 
sive material  of  money,  nearly  as  well  as  both.  The  ob- 
vious reason  why  both  have  been  employed,  is  the  well 
known  fact  that  gold,  in  virtue  of  its  high  cost  as  com- 
pared with  its  bulk  and  weight,  is  more  convenient  as  a 
measure  of  large  values,  while  silver,  by  reason  of  its 
low  cost,  is  better  adapted  to  serve  as  the  measure  of 
small  values.  I  shall,  therefore,  for  the  sake  of  con- 


CHAP.  III.         AS  INFLUENCING  PRODUCTION.  7? 

venience  and  perspicuity,  consider  the  material  of  money 
as  consisting  of  a  single  product — say,  silver. 

I  have  shown  that  silver  in  the  form  of  bullion  has 
two  desires  to  satisfy,  the  desire  for  plate  and  other  ar- 
ticles into  which  it  is  wrought  for  direct  consumption, 
and  the  desire  for  coin  to  serve  as  an  auxiliary  in  the 
production  of  wealth.  Silver  is  thus  made  to  assume 
three  distinct  forms;  bullion,  plate  and  coin.  The  mar- 
ket value  of  each  of  these  will  vibrate  in  accordance 
with  the  relative  intensity  of  supply  and  demand,  as 
they  happen  to  exist  in  relation  to  either  at  any  given 
moment ;  but  since  bullion,  plate  and  coin  are  readily 
transformed  into  each  other  without  much  expense,  we 
may  safely  assume  that  their  respective  market  values 
vibrate  in  unison  ; — that  when  an  augmented  demand  or 
diminished  supply  of  coin  expands  the  value  thereof,  the 
value  of  silver*  in  every  form  is  simultaneously  expanded  in 
an  equal  degree,  and  vice  versa.  Let  us  then  first  ascer- 
tain what  constitutes  the  utility  of  silver  in  the  form  of 
coin,  see  what  place  it  occupies  in  the  great  laboratory 
of  production,  and  what  service  it  is  required  to  perform. 
We  shall  thus  learn  not  only  the  nature  of  the  desire 
for  money,  and  the  extent  of  the  demand  to  which  it 
gives  birth,  but  another  highly  important  fact,  the 
existence  of  which  seems  to  have  been  entirely  over- 
looked hitherto :  namely,  that  the  natural  laws  of  trade 
award  to  the  money  machine  a  standard  magnitude  from 
which  it  cannot  depart  without  setting  in  motion  the  re- 
quisite influences  to  bring  it  back. 

The  purpose  of  money  is  to  measure  and  transfer 
surplus  values  ;  i.  e. ,  products  intended  for  passing 
through  the  channels  of  commerce  before  reaching  the 
hands  of  their  consumers,  together  with  the  two  trans- 
ferable productive  forces,  capital  and  land.  These  con- 


78  LAWS    OF    TfcADE,  PART  I. 

stitute  much  the  larger  portion  of  the  gross  creations  of 
Value — including  the  value  added  by  the  manufacturing 
arts  and  by  commerce,  probably  not  less  than  nine* 
tenths  of  the  whole.  The  subordinate  machinery  of 
commerce  transports  these  products  from  producers  to 
manufacturers,  merchants,  or  consumers,  and  money  is 
the  lever  standing  ready  to  measure  and  transfer  them, 
by  presenting  an  equivalent  in  a  portable  and  conven- 
ient form.  This  is  the  only  office  of  money,  and  in  the 
performance  thereof  consists  its  utility.  It  was  for  this 
purpose  alone  that  it  was  devised,  and  we  may  search 
over  the  entire  domain  of  production,  examining  as  we 
go,  every  process,  without  finding  it  employed  in  any 
other  service.  Therefore,  the  true  magnitude  of  the 
aggregate  desire  of  money  is  equal  to  the  quantity  re- 
quired to  perform  that  office.  Without  stopping  to  per- 
form the  difficult,  and,  at  present,  uncalled  for  task,  of 
estimating  and  expressing  in  numerical  language,  the 
precise  quantity  of  money  required  in  order  to  render 
the  value  of  the  object  equal  in  magnitude  to  the  desire, 
it  will  be  sufficient  for  our  purpose  to  state  the  actual 
result  as  evidenced  by  the  statistics  of  money.  These 
show,  that,  at  the  present  cost  of  producing  gold  and 
silver,  the  standard  magnitude  of  the  money  machine,  if 
expressed  in  dollars,  is  equal  to  about  fifteen  times  the 
number  of  inhabitants  in  the  commercial  world  ;  and  that 
this  ratio  varies  but  slightly  when  the  estimate  is  con- 
fined to  any  given  nation,  district,  city,  town,  or  village. 
This  appears  to  be  the  quantity  of  money  required  to 
fill  the  channels  of  circulation  to  that  natural  degree  of 
fulness  in  which  no  portion  of  the  machine  is  either  idle 
or  overtasked.  Now,  it  is  apparent  that  whenever  the 
supply  of  money  either  exceeds  or  falls  short  of  this 
the  true  quantity  demanded,  the  correctness  of  its  mea- 


CHAP,  lit*    AS  INFLUENCING  PRODUCTION.          79 

siirements  is  destroyed,  because  the  aggregate  of  money  4 
whether  large  or  small,  must  perform  the  service  of  mea- 
suring and  transferring  all  other  values  in  search  of  a 
market,.  If  too  small,  i.  e.,  if  below  its  standard  mag 
nitude,  its  value  must  expand  to  render  it  equal  to  the 
service  required  of  it ;  if  too  large,  the  value  must  con- 
tract to  prevent  any  portion  of  the  machine  from  remain- 
ing idle.  In  the  first  case,  the  profits  on  the  production 
of  silver  are  enhanced,  in  the  second  they  are  dimin- 
ished ;  so  that  in  either  case,  the  natural  laws  which 
preserve  the  standard  magnitude  of  this  machine  are 
speedily  enforced. 

From  these  positions  it  follows,  that  whenever  the 
quantity  of  money  in  circulation  falls  below  the  natural 
standard,  the  money  value  or  market  price  of  all  other 
products  is  less  than  their  market  value, — in  other 
words,  a  money  equivalent  is  then  less  than  a  commercial 
equivalent.  When,  on  the  contrary,  the  money  machine 
is  too  much  enlarged,  then  the  market  price  of  all  other 
products  is  higher  than  their  market  value — a  money 
equivalent  is  then  greater  than  a  commercial  equivalent. 
True,  in  these  cases,  as  in  all  others,  self-interest  causes 
supply  and  demand  to  so  alternate  in  preponderance  that 
the  market  value  of  silver,  if  taken  at  its  mean,  is  iden- 
tical with  its  true  value ;  but  the  expansions  and  con- 
tractions of  its  value  render  it  defective  as  a  measure  of 
other  values.  The  value  of  silver  is  used  to  measure  all 
other  transferable  values,  and  to  be  given,  as  equiva- 
lents, in  exchange  for  most  of  those  actually  transferred  ; 
and  inasmuch  as  the  measure  itself  is  subject  to  ex- 
pansions and  contractions,  the  market  price  of  commodi- 
ties must  be  at  best  but  a  variable  and  uncertain  expo- 
nent of  even  their  market  value,  and  a  still  more  erring 
one  of  their  true  value. 


80  LAWS  OF  TRADE,  PART  i. 

To  render  silver  a  correct  measure  of  the  true  value 
of  other  products,  it  were  requisite  that  the  market 
value  of  all  products,  including  silver,  should  vibrate 
in  unison  ;  i.  e.,  they  should  all  simultaneously 
expand,  and  that  in  the  same  degree,  and  contract  with 
like  uniformity.  This  is  known  to  be  impossible ;  in- 
deed, so  far  is  it  from  the  possible,  that  no  two  classes 
of  value  can  be  made  to  vibrate  thus  in  unison.  We 
have  seen,  however,  that  values  could  not  be  exchanged 
on  the  principle  of  true  equivalents,  or  equal  volumes  of 
value  at  its  natural  density,  even  with  the  aid  of  a  per- 
fect measure.  Hence  this  sort  of  measure  is  not  essen- 
tial to  the  operations  of  commerce. 

To  render  silver  a  perfect  measure  of  the  market  value 
of  other  products,  it  is  indispensable  that  its  own  value 
should  be  of  uniform  density, — that  its  volume  should 
neither  expand  nor  contract,  but  remain  as  steadfast  as 
that  of  the  bushel.  Then  the  dollar  would  invariably 
stand  as  the  measure  of  a  definitive  volume  of  market 
value,  as  well  as  a  definitive  quantity  of  true  value  ; 
and  whenever  another  product  should  be  brought  forward 
to  be  measured  by  it  and  exchanged  for  it,  equal  vol- 
umes of  each  would  be  exact  commercial  equivalents, 
whatever  the  degree  of  condensation  or  inflation  of 
the  market  value  of  the  variable  product ;  in  which 
case,  the  marked  price  would  be  a  true  indicator  of 
the  market  value.  But  the  market  value  of  the  dol- 
lar being  as  variable  as  that  of  all  other  products,  . 
the  actual  results  of  its  measurements  must  be  equally 
variable  and  uncertain.  They  may  be  compared  to 
measurements  of  wheat  in  a  bushel,  where  both  are  sub- 
ject to  irregular  expansions  and  contractions.  Place 
the  wheat  in  the  bushel  when  one  is  in  its  paroxysm  of 
expansion  and  the  other  of  its  contraction,  the  result 


CHAP.  III.         AS  INFLUENCING  PRODUCTION.  81 

must  differ  widely  from  the  true  measure ;   and  it  is  pre- 
cisely thus  that  money  measures  the  value  of  commodi- 
ties.    For  example,  take  an  ounce  of  silver  and  a  bushel 
of  wheat,  and  suppose  them  to  embody  equal  quantities 
of  productive  service  ;  they  are,  therefore,  true  equiva- 
lents ;  and,  when  supply  and  demand  in  relation  to  each 
are   evenly   balanced,    they   are  also  commercial  equi- 
valents, and  money  equivalents.      Now,   suppose   that 
with  the  value  of  silver  remaining  undisturbed,  the  sup- 
ply of  wheat  so  far  exceeds  the  demand  that  two  bushels 
of  it  will  be  given  for  one  ounce  of  silver  ;   then,  it  is 
apparent,  the  value  of  wheat  is   condensed  to  half  its 
natural  volume,  and  hence,  that  two  bushels  of  wheat 
and  one  ounce  of  silver  bear  to  each  other  the  relation  of 
commercial  equivalents,  and  also,  of  money  equivalents, 
but  not  of  true  equivalents.     If  we  suppose  a  simulta- 
neous and   equal   condensation  of  the   value  of  silver, 
then  the  money  equivalent  would  again  coincide  with  the 
true  equivalent  as  well  as  with  the  commercial  equiva- 
lent.    But  if  a  corresponding  degree    of  expansion  in 
the  value  of  silver  should  occur  simultaneously  with  the 
condensation  of  value  in  the  wheat,  then  one  ounce  of  sil- 
ver and  four  bushels  of  wheat  would  be   money  equi- 
lents,  although  the  market  value  of  wheat,  as  compared 
with  the  value  of  products  generally,  would  have  dimin- 
ished but  one  half :  while  one  ounce  of  silver  and  one 
bushel  of  wheat  would  still  remain   true  equivalents. 
Hence   we   find,   that  whenever   a  deficient  supply  of 
money  augments  the  market  value  thereof,  the  market 
price  of  commodities  is  less  than  their  market  value  ; 
and  when  the  market  value  of  money  is  diminished  by 
an  over  supply  or  other  cause,  that  the  market  price  of 
commodities  is  then  greater  than  their  market  value.     But 
since  the  expansions  of  the  market  value  of  money  exactly 
8 


82  LAWS    OF    TRADE,  PART  I. 

equal  its  contractions,  it  follows  that  if  estimated  at  its 
mean,  the  money  value  exactly  equals  the  market  value, 
and  therefore,  the  true  value  ; — that  notwithstanding  the 
fact  that  money  equivalents,  market  equivalents  and  true 
equivalents  rarely  if  ever  coincide  in  quantity,  yet,  if 
measured  in  the  aggregate,  they  are  equals ;  and  that, 
despite  the  elastic  properties  of  money  as  a  measure  of 
value,  it  serves,  nevertheless,  to  measure  with  a  sort  of 
vibrating  truthfulness,  not  only  the  market  value  of  pro- 
ducts, but  their  true  value  also. — The  market  value  of 
all  products,  including  that  of  money  by  which  the  others 
arc  measured,  may  be  regarded  as  so  many  pendulums 
fastened  to  a  common  centre,  the  true  value, — each  im- 
pelled by  supply  and  demand  to  vibrate  on  a  line  pecu- 
liar to  itself,  and  each  expanding  as  it  approaches  one 
end  of  its  circuit  and  contracting  as  it  nears  the  other, 
with  money  measuring  all  it  meets,  regardless  alike  of 
its  own  position  and  volume  and  those  of  the  others,  in 
the  general  melee.  Notwithstanding  this  seeming  chaos, 
the  principles  involved  preserve  order,  and  diffuse 
throughout  the  whole  a  perfect  harmony.  Demand, 
backed  by  the  desire  of  happiness,  stands  at  one  end  of 
each  line,  attracting  depressed  value  and  repelling  in- 
flated value ;  supply,  backed  by  self-interest,  stands  at 
the  opposite  extremes,  repelling  values  when  depressed, 
and  attracting  them  when  inflated,  thus  causing  the  ag- 
gregate of  expansions  and  contractions  in  each  and  every 
class  of  values  to  equal  each  other,  at  any  given  time, 
and  for  all  time  ;  and  since  money  is  subject  to  the  same 
Jaws,  and  at  all  times  employed  in  the  performance  of 
its  .office,  it  follows,  that  however  variable  the  results  in 
particular  measurements,  yet,  when  taken  at  its  mean, 
the  measure  js  .a  true  one. 


CHAP.  III.  AS    INFLUENCING   PRODUCTION.  83 

It  is  scarcely  necessary  to  observe  that  the  partial 
substitution  of  convertible  paper  money  for  coin  has  in 
nowise  altered  the  principles  involved.  The  paper  is 
based  upon  coin,  and  purports  to  represent  it.  The 
parties  accepting  it  as  an  equivalent,  know,  or  at  least 
believe,  that  they  can  at  any  moment  exchange  it  for  the 
quantity  of  coin  it  purports  to  represent  ;  whence  we 
may  safely  infer  that  the  money  value  of  products  is  not 
otherwise  affected  by  the  substitution  of  paper  for  coin, 
than  by  the  expansions  and  contractions  of  the  banking 
system.  That  attribute  of  the  banking  system  greatly 
increases  the  extent  and  the  frequency  of  the  oscillations 
of  money  value,  but  the  mean  remains  the  same. — Irre- 
deemable papeV  money  is,  however,  quite  a  different 
thing.  Its  market  value  chiefly  depends  on  the  amount  in 
circulation,  and  that  is  governed  by  no  principle,  other 
than  the  caprice  of  the  parties  issuing  it,  unless  the 
quantity  be  regulated  by  positive  law.  These  posi- 
tions will  be  illustrated  and  enforced  in  our  chapter  on 
money. 

Hitherto  we  have  taken  no  notice  of  the  variations  to 
which  the  quantity  of  true  value  belonging  to  a  given 
product  is  subject.  I  considered  the  expansions  and 
contractions  of  the  value  in  the  products  measured,  and 
in  that  of  the  measure  itself,  sufficiently  intricate,  with- 
out connecting  with  their  solution  another  variable  pro- 
perty of  value.  But  having,  as  I  hope,  shown  the  true 
nature  and  relationship  of  money  value,  market  value,  and 
true  value,  I  will  now  endeavor  to  point  out  the  variable- 
ness of  the  latter  when  considered  in  connexion  with 
products. 

These  variations  are  sometimes  temporary  and  some- 
times permanent,  as  may  be  readily  shown.  We  will 
take  for  our  first  illustration  the  product,  wheat.  We 


84  LAWS    OF   TRADE,  PART  I* 

will  suppose  that  in  a  season  of  ordinary  bounty,  a 
bushel  of  wheat  embodies  one  day's  service  of  an  indi- 
vidual and  of  proportionate  quantities  of  capital  and 
land  ;  that  in  a  season  of  extraordinary  bounty,  the  same 
quantity  of  service  will  produce  two  bushels  of  wheat, 
and  that  in  an  unpropitious  season  it  will  produce  but 
half  a  bushel.  When  produced  under  these  different  cir- 
cumstances,it  is  apparent  that  the  half  bushel,  the  bushel, 
and  the  two  bushels  of  wheat,  will,  respectively,  embody 
equal  quantities  of  value.  These  are  temporary  variations 
in  the  true  value  of  a  given  quantity  of  wheat.  But  sup- 
pose that  agricultural  chemistry,  or  other  advancing 
knowledge,  should  point  out  a  more  perfect  method  of 
culture,  whereby  a  given  quantity  of*  the  productive 
forces,  could,  under  like  circumstances  and  time,  produce 
twice  the  quantity  of  wheat  they  now  do.  This  would 
permanently  lessen  by  one  half,  or  50  per  cent,  the  true 
value  of  wheat. 

Again :  Suppose  that  one  ounce  of  silver  now  represents 
the  quantity  of  productive  service  indicated  above,  and 
that  the  discovery  of  richer  mines,  or  advances  in  the  arts 
of  mining  and  smelting,  should  hereafter  enable  like 
forces  to  produce  double  the  quantity  ;  this  would  per- 
manently diminish,  by  one  half,  the  true  value  of  silver. 
In  point  of  fact,  this  consequence  followed,  and  in  even 
a  greater  degree,  the  discovery  and  working  of  the  rich 
silver  mines  of  Spanish  America.  Two  and  a  half 
ounces  of  silver  now  contain  about  the  same  quantity  of 
productive  service  that  one  ounce  did  before  that  event. 
Hence,  the  true  value  of  silver  was  thereby  reduced 
from  250  to  100,  equal  to  60  per  cent.  This,  for  a 
time,  must  have  caused  the  measure  of  value  to  depart 
widely  from  the  true  standard,  for  it  is  to  be  noticed, 
that  the  diminished  value  of  that  which  was  more 


CHAP.  III.    AS  INFLUENCING  PRODUCTION.  85 

cheaply  produced,  lessened  in  an  equal  degree  the  value 
of  all  the  silver  existing  at  the  time.  But  after  the 
diminished  value  became  adjusted  to  the  enlarged  pro- 
duction, the  measure  returned  to  the  true  standard. 
Two  and  a  half  ounces  of  silver  now  stand  as  an  equi- 
valent where  one  ounce  did  before  the  diminution  of  its 
true  value  occurred.  This  is  the  only  ultimate  conse- 
quence so  far  as  money  is  concerned. 

The  true  value  of  all  products  are  thus  subject  to 
variation  of  quantity.  But  amidst  all  their  changes, 
whether  temporary  or  permanent,  the  market  value  and 
the  money  value  move  with  them,  and  vibrate  about 
them ;  and  there  they  must  ever  continue,  for  they  are 
bound  by  a  chain  that  cannot  be  broken  unless  the  gov- 
erning principles  of  human  nature  are  changed.  When 
the  mainspring  of  production  shall  have  had  its  power 
so  inverted  that  men  will  be  impelled  to  labor  for  the 
advancement  of  others  interest  rather  than  for  their 
own,  then,  but  not  sooner,  we  may  expect  to  see  these 
fundamental  laws  of  commerce  and  production  annulled. 

The  preceding  analysis  of  market  value  and  price,  is 
so  prolix,  and  has  so  much  of  apparent  repetition,  that  it 
will  be  likely  to  exhaust  the  patience  of  all  who  attempt  to 
wade  through  it ;  but  I  have  found  it  impossible  to  make 
a  fair  presentation  of  my  views  on  the  subject  in  less 
space.  The  problems  it  presents  are  confessedly  the 
most  difficult,  and  their  solution  the  most  important  in  a 
practicable  point  of  view,  of  any  that  lie  within  the 
boundaries  of  this  science ;  and  since  it  appeared  to  me  that 
the  efforts  of  other  inquirers  had  not  resulted  in  much 
real  progress,  I  felt  constrained  to  push  my  explorations 
to  the  bottom  of  the  subject,  and  to  trace  out  all  its  ra- 
mifications, in  the  hope  of  discovering  its  truths,  I  think  I 
succeeded  so  far  as  to  have  their  general  ourUnes  impressed 
8* 


86  LAWS    OF    TRADE,  PART  I. 

on  my  own  mind ;  but  whether  I  have  been  equally  suc- 
cessful in  transcribing  them  on  to  these  pages,  is  quite  a 
different  matter,  and  one  in  which  my  confidence  is 
weak. 

I  have  now  finished  the  discussion  of  the  principles 
which  seem  to  me  to  constitute  that  section  of  the  natural 
laws  of  trade  which  preside  over  the  production  of 
wealth,  rather  than  over  its  distribution  or  its  consump- 
tion. We  are  thus  prepared  to  pass  to  the  distributing 
section,  and  thence  to  the  consuming;  but,  as  before 
observed,  the  three  are  so  blended  and  interlinked, — the 
laws  which  govern  either  one  of  these  processes  have 
such  an  important  bearing  on  the  other  two,  that  the 
division  has  more  of  form  than  of  propriety  about  it. 

SECTION    II. 

Of  Distribution. 

The  money  value  of  products,  when  measured  at  the 
mean,  being,  as  I  have  shown  in  the  preceding  section, 
equal  in  quantity  and  volume  with  their  true  value,  and 
being  moreover,  the  index  which  guides  producers,  as  well 
as  the  equivalent  received  by  them  in  most  of  their  ex- 
changes, I  shall  henceforward  employ  the  term  market 
price,  as  synonimous  with  true  value,  except  when  I  have 
occasion  to  note  its  vibrations. 

When  one  individual  loans  money  to  another,  it  is 
familiar  knowledge  that  he  receives  a  consideration, 
called  interest,  for  its  service  or  use.  This  consideration 
usually  ranges  somewhere  between  three  and  nine  per 
cent,  per  annum  on  the  amount  loaned,  though  extraor- 
dinary circumstances  sometimes  cafry  it  for  short 
periods  beyond  those  limits.  The  mean,  therefore,  is  about 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  87 

six  per  cent.  ;  but  if  we  deduct  one  per  cent,  for  taxa- 
tion and  the  risk  of  loss,  it  leaves  five  per  cent,  per 
annum  as  the  average  net  revenue  of  capital  in  the  form 
of  money.  Now,  inasmuch  as  money  and  every  other 
form  of  productive  capital,  can  be,  and  are,  at  the  plea-  '* 
sure  of  their  owners,  exchanged  for  each  other  in  equi- 
valent portions,  it  follows  that  five  per  cent,  per  annum 
is  the  mean  net  revenue  of  every  kind  of  productive  ca- 
pital ;  and  since  productive  capital  and  land  are  also 
exchanged  for  each  other  in  equivalent  portions,  it  fol- 
lows that  the  net.  annual  revenue  of  land  is  likewise 
five  per  cent.  These  positions  carry  with  them  their 
own  demonstration  ;  they  are  almost  self-evident  truths, 
for,  with  freedom  of  choice,  it  is  manifest  that  self-inter- 
est will  prompt  every  proprietor  of  capital,  or  of  land, 
to  select  the  form  which  gives  promise  of  the  highest  net 
revenue ;  and  with  all  thus  choosing,  it  is  equally  clear 
that  the  rate  of  net  revenue,  in  every  form  of  product- 
ive capital  and  land,  will  be  kept  upon  a  level.  When 
the  productive  forces,  called  labor  and  skill,  are  subject 
to  alienation,  as  in  the  case  of  negro  slavery,  the  net 
revenue  accruing  to  their  proprietors  must,  in  virtue  of 
the  same  principle,  be  kept  upon  the  same  level.  And 
even  when  skill  and  labor  are  inalienable,  they  are,  like 
money  and  all  other  kinds  of  productive  capital  and 
land,  subject  to  loan  for  a  consideration.  True,  the 
loan,  in  this  case,  is  called  hire,  and  the  consideration 
wages  instead  of  interest  or  rent,  but  the  difference  in 
names  does  not  alter  the  principle. — From  these  pre- 
mises we  derive  the  inference,  that  the  net  revenue  of 
each  and  all  the  productive  forces  conform  to  a  common 
standard,  which,  if  estimated  at  its  mean,  is  about  five 
per  cent,  per  annum  on  the  value  of  the  forces  employed. 
In  other  language,  the  net  annual  profits  accruing  to  the 


88  LAWS     OF    TRADE,  PART  I. 

owners  of  the  productive  forces,  whether  considered  in 
detail  or  unity,  are  about  five  per  cent.,  or  one-twentieth 
of  the  value  of  the  forces  employed.  Whatever  may  be 
the  gross  amount  of  value  created,  all  save  this  is  con- 
sumed in  the  preservation  and  reproduction  of  the  forces 
themselves ;  or  I  should  say,  rather,  that  after  the 

(share  of  the  product  which  is  indispensable  to  the  exist- 
ence of  the  agents  producing  it,  has  been  absorbed  by 
them,  there  is  found  to  remain  an  annual  surplus  of  five 
per  cent.,  subject  to  the  pleasure  or  caprice  of  its 
owners. 

But  the  question  here  arises  :  What  constitutes  the 
value  of  the  productive  forces,  and  how  may  the  quan- 
tity of  value  belonging  to  each  be  ascertained  ?  At- 
tending to  the  latter  part  of  this  inquiry  first,  I  answer, 
that  statistics  indicate,  and  observation  confirms  the 
truth  of  the  following  position, — namely  :  The  aggregate 

^  net  revenue  of  land  is  exactly  equal  to  that  of  capital, 
and  the  aggregate  net  revenue  of  industry  is  precisely 
equal  to  that  of  capital  and  land  combined.  From 
this  position,  taken  in  connexion  with  the  fact  just 
noticed,  that  each  class  of  the  productive  forces 
yield  to  their  owners  an  equal  per  centage  of  pro- 
fits, it  follows,  that  the  market  value  of  the  aggre- 
gate of  capital  and  of  land  are  equal,  i.  e.,  they 
are  commercial  equivalents ;  and  that,  if  skill  and 
labor  were  transferable,  the  market  value  of  the  two 
would  be  exactly  equal  to  the  united  market  value  of 
capital  and  land.  The  importance  of  these  positions 
will  be  readily  conceded.  They  relate  to  the  funda- 
mental natural  laws  concerned  in  the  distribution  of 
wealth,  and  if  the  matters-of-fact  therein  asserted  can 
be  establised  as  ascertained  truths,  it  will  be  at  once 
perceived  that  they  afford  the  means  of  unravelling  the 


CHAP.   III.       AS  INFLUENCING  DISTRIBUTION.  89 

mysteries  of  this  section  of  the  laws  of  trade.  Let  us  then, 
first  glance  at  the  evidence  presented  in  their  support  by 
observation  and  experience,  and  afterwards  try  to  ascer- 
tain the  lines  of  causation  to  which  they  belong,  and  to 
unfold  the  links  which  connect  them  with  their  antece- 
dents and  consequents. 

In  the  first  place,  it  is  to  be  observed  that  land,  and 
that  portion  of  productive  capital  which  constitutes  its 
ameliorations,  are  so  blended  that  it  is  impossible  to  es- 
timate with  precision  either  their  respective  values  or 
the  amount  of  productive  service  contributed  by  each. 
Nevertheless,  if  we  take  a  village  or  city  on  which  to 
base  an  estimate,  where  the  meliorations  of  land  mainly,, 
consist  in  buildings  erected  upon  it,  we  shall  be  able  to 
separate  the  value  of  the  land  from  that  of  the  capital  /" 
with  sufficient  correctness  to  show,  that  the  aggregate  of 
the  one  about  equals  that  of  the  other.  The  statistics 
presented  by  assessments  of  property  for  the  purpose  of 
taxation,  invariably  exhibit  the  estimated  value  of  land 
and  its  meliorations  under  the  head  of  c  real  estate,' 
and  the  estimated  value  of  all  other  productive  capital, 
under  the  head  of  '  personal  estate.'  Assessments 
made  with  the  view  of  obtaining  information  for  the 
guidance  of  statesmen,  or  for  historic  data,  usually  ob- 
serve the  same  rule  of  classification.  Thus  divided,  we 
may  readily  infer  that  the  value  of  real  estate  greatly/ 
exceeds  that  of  personal  estate,  and  so  these  statistics  - 
invariably  indicate.  But  if  we  take  the  estimate  for 
any  given  village,  town,  or  city,  and  from  the  gross 
value  of  the  real  estate  deduct  the  value  of  the  build- 
ings, and  add  it  to  the  personal  estate,  we  shall  then 
find  them  equal,  provided  the  assessment  had  been  cor- 
rectly made,  which,  by  the  way,  very  rarely  occurs. 

Now  as  to  observation.     Those  who  are  familiar  with 


90  LAWS     OF    TRADE,  PART  I. 

the  value  of  property  in  the  city  of  New  York  (any 
other  city  would  serve  equally  well  as  an  illustration) 
are  aware,  that  the  market  value  of  the  land  on  which  it 
is  built  is  much  greater  than  the  value  of  the  buildings  ; 
that  if  each  lot  and  each  building  in  the  city  should  be 
separately  put  up  at  public  sale,  and  sold  to  the  highest 
bidders,  the  aggregate  price  of  the  lots  would  greatly 
exceed  that  of  the  buildings.  But  if  the  productive 
(capital  contained  in  the  buildings  should  be  included 
with  them,  then  the  gross  price  of  the  two  would  be 
about  equal.  This  is  in  accordance  with  our  theory, 
and  we  think  that  observation  strongly  supports  the  po- 
sition, if  it  does  not  establish  its  soundness.  A  striking 
evidence  of  its  truth  is  afforded  in  the  well  known  fact 
that  each  lot  will  bring  a  price  corresponding  with  the 
amount  of  productive  capital  placed  either  upon  it  or  in 
its  immediate  vicinity.  Take  Wall  street,  for  example, 
where  the  buildings  are  most  costly  and  contain  most  of 
productive  capital ;  there  the  value  of  land  is  greatest. 
Take  a  portion  of  the  city  where  the  buildings  are  poor, 
and  the  locality  remote  from  the  productive  capital 
employed  in  commerce  ;  there  the  value  of  land  is 
least.  Here  it  should  be  remarked,  that  buildings  and 
parts  of  buildings  designed  for  ornament  rather  than  for 
use,  do  not  come  under  the  denomination  of  product- 
ive capital.  The  true  test  of  productive  value  belong- 
ing to  a  house,  store,  or  other  building,  is  the 
^ent  it  will  command,  independent  of  the  ground 
rent.  It  is  to  be  observed  also,  that  productive  capital 
influences  the  market  value  of  land  beyond  the  imme- 
diate spot  on  which  it  is  placed.  For  this  reason  it 
would  be  necessary,  in  order  to  render  the  two  exactly 
equal  in  New  York  or  any  other  city,  to  include  the 
suburbs  and  adjoining  lands  in  the  estimate. 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  91 

Again  :  Little  more  than  half  a  century  has  elapsed 
since  the  land  on  which  the  city  of  Cincinnati  stands, 
was  purchased  at  one  dollar  per  acre.  There  was  then 
no  capital  there.  Now  there  are  many  millions  of  capi- 
tal there  ;  and  hence,  we  now  find  the  market  value  of  the 
land,  exclusive  of  the  erections,  as  many  millions.  It 
is  thus  of  all  other  cities,  towns,  and  villages  through- 
out the  civilized  world ;  and  it  is  thus  in  all  agricultural 
districts,  but  in  these  the  land  and  its  meliorations  are 
so  much  more  intimately  blended  that  we  cannot  per- 
ceive the  fact  so  readily. 

The  truth  is,  the  market  value  of  land  is  merely  the 
reflection  of  the  value  of  the  productive  capital  placed 
upon  it  and  in  its  immediate  vicinity.  It  has  no  real 
value  of  its  own — it  cost  nothing  to  produce ;  but  since 
the  laws  have  endowed  it  with  the  vital  principle  of 
wealth  by  subjecting  it  to  individual  ownership,  it  can 
no  longer  be  obtained  without  giving  in  exchange  for  it 
an  equivalent  portion  of  the  capital  present  and  designed 
to  concur  with  it  in  the  production  of  wealth. 

The  truth  of  our  position,  that  the  market  value  of 
the  aggregate  of  land,  and  that  of  the  aggregate  of  pro- 
ductive capital,  are  equal,  and  this  whether  the  estimate 
be  confined  to  a  neighborhood,  city,  state,  or  includes 
|  the  entire  domain  of  civilization,  seems,  then,  to  be  suffi- 
ciently apparent ;  and  I  cannot  withhold  the  expression 
of  my  surprise,  that  all  writers  upon  the  subject  should 
have  overlooked  a  fact  so  obvious  and  so  important.  I 
might  content  myself  with  having  thus  pointed  out  the 
existence  of  this  principle,  and  proceed  to  adopt  it  as 
additional  data  on  which  to  base  my  remaining  investi- 
gations ;  but  I  prefer  to  push  the  inquiry  deeper.  Our 
knowledge  of  this  principle  rests  solely  upon  the  evi- 
dence of  experience  and  observation.  These  show  us. 


)2  LAWS    OF    TRADE,  PART  I. 

that  the  fact  exists  as  I  have  stated  it,  namely,  that  the 
market  value  of  land  and  of  productive  capital  are  uni- 
formly equal  to  each  other ;  but  they  afford  no  explana- 
tion of  the  causes  from  which  the  phenomenon  results, 
and  hence,  give  no  sufficient  assurance  of  its  continu- 
ance. For  aught  we  yet  know,  the  observed  uniformity 
may  result  from  chance.  But  if  we  can  show  by  legiti- 
mate deductions  from  other  well  established  laws,  that 
this  phenomenon  must  necessarilly  result  from  them, 
then  we  may  safely  pronounce  it  a  truth,  the  existence 
of  which  was  first  indicated  by  observation,  and  after- 
wards verified  by  deduction.  To  do  this  I  must  pro- 
ceed to  answer  the  first  clause  of  the  question  with 
which  we  started — namely  :  What  constitutes  the  value 
of  the  prime  agents  of  production  ? 

In  regard  to  the  value  of  productive  capital,  it  has 
been  shown  already,  that  it  consists  of  the  services  of 
pre-existing  productive  forces,  and  that  its  quantity,  in 
any  given  machine,  or  in  all  machines,  is  truly  indicated 
by  the  average  market  price.  As  regards  land,  it  has 
been  shown  that,  apart  from  its  meliorations,  it  does  not 
possess  true  value  ;  that  its  market  value  had  its  origin 
in  the  Social  Contract,  by  virtue  of  that  feature  thereof 
which  established  and  enforced  the  right  of  property  in 
land  ;  and  we  know  that  its  market  price,  like  that  of 
every  other  transferable  value,  is  governed  by  the  se- 
condary law  of  trade,called  supply  and  demand.  In  tracing 
to  their  origin  the  vibrations  of  price  in  other  products, 
we  discovered  that  self-interest  and  the  desire  of  happi- 
ness so  ruled  supply  and  demand  as  to  render  the  aver- 
age market  price  an  unerring  exponent  of  the  quantity 
X  of  true  value.  It  is  requisite  that  we  now  determine 
\\  what  primary  laws  govern  the  supply  of  and  demand  for 
land,  wherein  no  true  value  exists. 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  93 

Land  is  an  indispensable  co-laborer  in  almost  every 
process  of  production.  It  is  not  only  one  of  the  requisites 
in  agriculture,  but  also  in  commerce,  manufactures  and 
the  mechanic  arts,  because  these  must  have  land 
whereon  to  erect  warehouses,  mills,  shops  and  dwellings. 
In  fact,  land  participates  in,  and  its  proprietors  receive 
a  share  of,  every  new  creation  of  value,  except  when  the 
process  is  executed  upon  unappropriated  land  or  water. 
For  the  present  we  will  overlook  the  inconsiderable  ex- 
ception, and  proceed  to  consider  land  as  one  of  the  con- 
curring agents  in  every  process  of  production,  and  its 
co-operation  as  indispensable  to  success.  The  co-opera- 
uop.  of  skill,  labor  and  capital,  being,  as  is  well  known, 
also  indispensable  in  every  act  of  production,  it  follows 
that  value  can  only  be  created  by  blending  the  services 
of  the  four  productive  forces.  The  desire  of  land 
originates  in  this  necessity.  Present  a  sufficiency  of 
land  to  concur  with  all  the  skill,  labor  and  capital  placed 
upon  it,  and  the  desire  is  satisfied ;  present  more  than 
this,  and  a  portion  of  it  must,  for  the  time  being,  remain 
unemployed;  present  less,  and  the  desire  will  be  but 
partially  satisfied.  Wherefore,  the  magnitude  of  the 
liberated  desire  for  land  is  governed  by,  and  is  equal  to, 
the  quantity  of  productive  capital  placed  upon  it.  The 
skill,  labor  and  capital  engender  a  desire  for  equivalent 
portions  of  land  to  concur  with  them,  and  the  desire 
prompts  a  demand  precisely  equal  to  the  existing  supply 
of  productive  capital.  Let  us  next  see  what  governs  the 
supply. 

Land,  unlike  either  of  the  other  forces,  is  invariable  V 
in  quantity  and  position.  How  strong  soever  the  de- 
mand, or  superabundant  the  supply,  the  quantity  of 
land  can  neither  be  augmented  nor  diminished,  nor  its 
locality  shifted,  but  must  remain  forever  subject  to 
9 


94  LAWS    OF    TRADE,  PART  I. 

the  boundaries  and  local  distribution  ordained  by  na- 
ture. Therefore,  the  supply  of  land  in  any  given 
locality  is  invariable  in  quantity.  It  cannot,  like  all 
classes  of  producible  value,  be  augmented  when  the  de- 
mand strengthens  and  lessened  when  it  weakens,  so  as 
to  maintain  a  uniform  equality  in  the  magnitudes  of  the 
desire  and  the  object ;  but  inasmuch  as  individuals  are 
its  owners,  self-interest  will  direct  them  to  expand  or 
contract  its  market  value  in  proportion  to  the  increase 
or  diminution  of  the  demand,  so  that  the  market  value  of 
the  object  will  at  all  times  correspond  in  magnitude 
with  the  desire.  When  the  desire  is  in  excess,  the  mar- 
ket value  of  the  land  will  expand  and  the  desire  con- 
tract, until  they  meet  at  a  point  midway  between  the 
natural  market  value  of  land  and  the  natural  magnitude 
of  the  desire  ;  and  vice  versa.  The  natural  market 
value  of  land  may  be  considered  equal  to  the  value  of  • 
the  productive  capital  required  to  cultivate  and  other- 
wise concur  with  it  in  the  processes  of  production. 

We  find,  then,  that  the  desire  of  happiness  governs 
the  demand  for  land,  as  it  does  the  demand  for  every  pro- 
duct of  value  ;  that  productive  capital  and  land  are 
equally  necessary  as  auxiliary  agents,  in  procuring  the 
ultimate  objects  of  desire — neither  one  being  useful  in 
the  absence  of  the  other — and  hence,  that  the  magnitude 
or  intensity  of  the  demand  for  each  must  be  equal :  that 
self-interest  governs  the  supply  of  all  classes  of  value, 
save  land,  the  supply  of  which  is  fixed  by  the  unalter- 
able fiat  of  nature  :  that,  as  regards  productive  capital, 
these  causes  produce  such  an  equation  of  supply  and 
demand  that  its  average  market  value  is  coincident 
with  its  true  value  ;  while  as  regards  land — which  has  no 
true  value  (its  legal  value  being  the  result  of  individual 
ownership  and  the  social  guaranty),  nor  capacity  of  en- 


CHAP.  III.       AS    INFLUENCING  DISTRIBUTION.  95 

largement  or  diminution — self-interest  so  governs  the 
expansions  and  contractions  of  its  market  value  as  to 
keep  the  volume  thereof  coincident  with  the  desire  for  it, 
and  hence,  equal  to  the  true  value  of  productive  capital, 
because  the  two  desires  are  equal. 

We  have  thus  verified  the  position  which  observation 
and  experience  gave  us  warrant  for  assuming.  We 
have  proved,  it  is  hoped,  by  legitimate  inferences  from 
well  established  premises,  that  the  observed  uniformity 
of  equality  between  the  market  value  of  land  and  that 
of  productive  capital,  is,  really,  one  of  the  natural  laws 
of  trade ;  and  that  it  results  from  the  laws  of  human 
nature  and  the  social  plan  of  wealth.  But  since  a  new 
and  important  truth  cannot  be  too  clearly  explained  nor 
too  strongly  impressed  on  the  mind,  I  will  try  to  pre- 
sent it  by  another  method,  and  in  company  with  kin- 
dred truths  equally  important. 

It  is  known  that  capital  and  land  are  very  unequally 
distributed  amongst  mankind.  The  same  remark  will 
apply  to  skill,  and,  in  some  degree,  to  labor.  But  by 
means  of  commerce  and  credit,  these  prime  agents  of 
production  are  so  evenly  distributed  that  every  indi- 
vidual who  is  possessed  of  industry,  and  willing  to  ex- 
pend it  productively,  is  provided  with  equivalent  por- 
tions of  capital  and  land  to  concur  with  it.  In  other 
words,  productive  capital  and  land,  whatever  may  be 
the  number  of  their  proprietors,  are  each  divided  into 
as  many  sections  as  there  are  industrial  machines  to 
concur  with  them.  In  this  division  of  the  productive 
forces  into  concurrent  groups,  the  distribution  of  pro- 
ductive ^capital  must  be  at  all  times  complete  ;  since, 
whenever  any  surplus  remains,  the  proprietors  thereof 
press  it  into  employment  by  offering  it  for  sale  at  re- 
duced prices,  or  the  loan  of  it  for  a  diminished  consider- 


96  LAWS    OF    TRADE,  PART  I. 

ation,  either  of  which  so  condenses  the  market  value  of 
all  similar  machinery,  that  room  is  thereby  given  for  the 
admission  of  the  surplus ;  and  thus  the  whole  of  productive 
capital  (whether  the  aggregate  be  great  or  small  as  com- 
pared with  the  other  prime  agents)  is  absorbed  in  consti- 
tuting concurrent  groups.  With  land  the  case  is  some- 
times different.  When  population  is  sparce  and  capital 
correspondingly  meagre,  it  is  impossible  to  employ, 
productively,  the  whole  quantity  of  land ;  nor  can 
that,  like  capital  and  population,  be  diminished  by 
removal  or  the  consumptions  of  time.  In  such  cases, 
each  industrial  agent  is  provided  with  an  equivalent 
portion  of  the  existing  capital,  and  with  as  much  land 
as  the  two  can  productively  employ.  Whatever  portion 
of  the  land  is  absorbed  in  this  way,  stands  as  the  equi- 
valent of  capital ;  the  surplus  meanwhile  remaining  un- 
employed, and  therefore  unproductive,  unless  the  aug- 
mentation of  its  market  value,  caused  by  the  increase  of 
population  and  capital,  be  improperly  regarded  as  the 
fruits  of  its  own  service.  But  when  population  and 
capital  are  sufficiently  abundant  to  concur  productively 
with  the  whole  quantity  of  land,  then  land,  like  capital, 
labor  and  skill,  is  all  absorbed  in  constituting  concurrent 
groups; — then,  every  owner  of  land,  and  every  owner 
of  productive  capital,  place  their  respective  portions 
of  these  prime  agents  in  the  hands  of  such  proprie- 
tors of  industry  as  will  pay  the  highest  consideration 
for  their  use,  retaining  sufficient  merely  to  concur  with 
their  own  industry,  provided  they  wish  to  exert  it  pro- 
ductively. Thus  the  entire  quantity  of  skill,  of  labor, 
of  capital,  and  of  land,  respectively,  are  divided  off  into 
as  many  concurrent  groups  as  there  are  of  individuals 
alike  able  and  willing  to  exert  their  industry  product- 
ively,— each  group  consisting  of  equivalent  portions  of 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  97 

the  four  productive  forces.  Whenever  a  surplus  of 
either  remains  unemployed,  the  proprietors  thereof  press 
it  into  service  by  lowering  the  consideration  demanded 
for  its  use ;  this  lessens  the  market  value  of  all  similar 
service,  which  at  first  produces  a  disturbance  in  the 
distribution  of  the  groups, — a  crowding  in  of  the  idle 
and  a  pushing  out  of  the  employed,' — but  after  a  fewi/ 
jostlings  and  oscillations  of  value  the  equilibrium  is  re- 
stored,— the  only  ultimate  consequence  being,  that  each 
group  has  a  somewhat  larger  quantity  of  the  redundant 
force  than  it  had  before  the  surplus  was  pressed  in. 
This,  however,  may  be  more  properly  called  the  penul- 
timate consequence ;  for  we  shall  find,  as  we  progress, 
that  the  relative  preponderancy  of  any  one  of  the  pro-  *• 
ductive  forces  gives  instant  action  to  causes  which  tend 
to  restore  the  equilibrium,  by  lessening  that  and  enlarg- 
ing the  others. 

Each  separate  concurrent  group  here  spoken  of,  is  not, 
indeed,  made  up  of  true  equivalents  of  the  respective 
forces, — the  value  and  the  net  revenue  of  a  given  force 
being  in  some  instances  greater,  and  in  others  less  than 
those  of  one  or  more  of  the  others  concurring  with  it ; 
but  if  taken  in  the  aggregate,  they  are  absolute  equiva. 
lents.'  Why  is  this  1  If  the  principle  prevails  in  the 
aggregate,  why  not  in  detail  ?  In  answer,  I  remark  in 
the  first  place,  that  the  portions  of  capital  and  land  con- 
curring in  each  separate  group  are  usually  absolute 
equivalents,  or  very  nearly  so,  because  the  market  value 
of  land  is  merely  the  reflection  or  counterpart  of  the 
value  of  the  capital  that  is  either  actually  concurring 
with  it  or  standing  ready  to  do  so.  When,  in  any  case, 
the  portion  of  capital  is  greater  than  the  market  value 
of  the  concurring  land,  it  is  because  the  reflection  of 
the  former  extends  to  adjoining  land,  and  there  causes 
9* 


98  LAWS    OF   TRADE,  PART  I. 

the  market  value  of  land  to  exceed  that  of  the  concur- 
ring capital ;  whence  it  may  be  inferred,  that  in  a  col- 
lection of  neighboring  groups,  the  value  as  well  as  the 
net  revenue  of  capital  and  land,  respectively,  must  be 
true  equivalents. — As  regards  skill  and  labor,  the  prin- 
ciple is  different.     We  frequently  witness,  especially  in 
the  manufacturing  art,  where  mills  and  expensive  ma- 
chinery are  employed,   production  going  on  extensively 
with  but  little  aid  from  industry.     Take,  for  example, 
a  steam  cotton  mill.     The  modification  of  the  materials 
which  pass  through  it  annually,  enhances  their  value,  say, 
$50,000 ;  while  the  wages  paid  for  labor  and  for  the 
superintending  skill  do  not  exceed  $10,000.     Here  the 
portions  of  capital  and  land  concurring  are  much  greater 
than  those  of  labor  and  skill ;  and  the  net  revenue  ac- 
cruing to  their  proprietors  is  also  much  greater.     But 
this  very  preponderancy  of  machinery,  or  capital,  begets 
the  necessity  of  a  corresponding   excess   of  labor  and 
skill  in  other  processes — namely,  in  the  repair  of  the 
mill  and  machinery,  and  in  the  construction  of  new  ones 
to  take  their  place  when  worn  out, — for  the  fact  is  ob- 
vious, that  industry  preponderates  in  these  processes. 
Indeed,  observation  fully  warrants  the  assertion,   that 
industry   preponderates    in    nearly   every    group    em- 
ployed in  the  fabrication  of  productive  capital.     Take 
for  illustrations,  the  wood-chopper,  with  no  other  capital 
than  his  axe,  the  mason  with  his  hammer  and  trowel,  the 
carpenter,  wheel  -wright  and  machinist  with  their  few  and 
simple  tools  of  trifling  cost.    And  if  we  look  at  the  means 
employed  in  the  construction  of  expensive  ornaments,  and 
other  articles  of  luxury,  the  demand  for  which  is  engen- 
dered by  the  profits  of  capital,  we  find  their  value  to 
consist  almost  exclusively  of  the   services  of  labor  and 
skill.     I  have  seen  a  music-box,  no  larger  than  an  ordi- 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  99 

nary  watch,  so  skilfully  and  laboriously  wrought  that  it 
required  $500  to  remunerate  the  fabricant,  the  material 
of  which  did  not  cost  twenty  dollars,  and  even  that  was 
chiefly  produced  by  industrial  service. 

We  find,  then,  that  an  excess  of  capital  in  one  group 
of  the  productive  forces,  begets  the  necessity  of  a  cor- 
responding excess  of  labor  and  skill  in  one  or  more  other 
groups  ;  and  hence,  when  considered  in  the  aggregate  and 
regarded'as  units,  the  three  must  be  absolute  equivalents. 

The  reader  will  have  noticed  that  I  have  uniformly 
spoken  of  industry  as  consisting  of  two  distinct  elements, 
and  as  constituting  two  distinct  agents  of  production — 
namely,  skill  and  labor.  Before  proceeding  farther,  it 
well  be  well  to  state  the  grounds  of  this  distinction,  espe- 
cially as  all  other  inquirers  have  regarded  industry  as  a 
single  force  in  the  production  of  value.  Nature  has, 
indeed,  united  skill  and  labor  in  the  same  being,  and  so 
blended  them  that  it  is  impossible  to  determine,  in  any 
case,  the  precise  amount  of  service  contributed  by  each. 
Yet  we  all  know  them  to  be  distinct  attributes ;  we 
know  that  the  one  emanates  from  the  mind,  the  other 
from  the  body :  the  productive  service  of  the  one  is 
mental  or  nervous,  that  of  the  other  corporeal  or  muscu- 
lar.— Place  capital  and  land  in  the  hands  of  an  idiot, 
and  how  strong  soever  his  muscular  powers,  he  will  be 
unable  to  wield  them  productively,  unless  his  efforts  are 
guided  by  the  skill  of  another.  Place  them  in  the 
hands  of  an  intellectual  giant  whose  physical  powers  are 
paralized,  and  he  will  be  equally  unsuccessful.  In  the 
first  instance,  skill  would  be  absent,  in  the  second,  la- 
bor ;  but  place  capital  and  land  in  the  hands  of  one  en- 
dowed with  both  elements  of  industry,  and  newly  created 
value  will  result  from  the  union,  because  the  four  essen- 


100  LAWS    OF    TRADE,  PART  I. 

tial  parents  are  present   to  blend  their  services  in  a 
single  product. 

We  are  familiar  with  the  fact,  that  whether  industry 
is  the  employed,  the  employer,  or  the  partner  in  pro- 
duction, its  proprietors  are  rewarded  in  proportion  to 
their  degrees  of  strength  and  skill,  respectively.  When, 
for  example,  the  muscles  are  strong  and  the  intellect 
weak,  the  proprietor  receives  but  the  revenue  of  labor  ; 
when  both  are  strong,  he  receives  the  revenue  of  both. — 
It  is  to  be  observed  that  mankind  differ  much  more 
widely  in  the  degrees  of  skill  wherewith  they  are  en- 
dowed, than  they  do  in  physical  powers.  Most  men  are  so 
v^ equally  gifted  with  the  latter  that  the  wages  paid  for  labor 
are  usually  the  same  to  the  weak  that  they  are  to  the 
strong.  Not  so,  however,  as  it  relates  to  skill,  for  we 
see  the  rewards  of  its  service  ranging  from  units  to  hun- 
dreds, and  even  to  thousands.  The  ordinary  day  la- 
borer, for  example,  may  be  said  to  receive  little  if  any 
re  ward  for  his  modicum  of  skill.  The  mechanic  receives  a 
reward  for  the  service  of  his  skill,  equal  perhaps  to  that 
received  for  his  labor.  The  artist,  the  merchant  and 
the  professional  man,  receive  still  higher  rewards  for 
their  outlays  of  skill,  reaching  in  some  cases  at  least  a 
thousand  fold  that  received  by  the  day  laborer  for  the 
skill  portion  of  his  services.  So,  also,  as  regards  those 
engaged  in  the  same  profession  or  calling :  the  higher  the 
degree  of  skill,  the  greater  the  reward.  It  is  no  un- 
common thing,  for  instance,  to  see  two  merchants  com- 
mence business  under  circumstances  alike  favorable, 
prosecute  it  with  an  equal  observance  of  application  and 
economy,  and  yet  end  at  the  opposite  extremes  of  the 
ladder  of  wealth,  simply  because  they  differed  in  degrees 
of  skill.  Skill  is  of  two  sorts,  intellectual  and  artistic. 
The  first  is  the  gift  of  nature,  the  second  is  acquired  by 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  101 

study  or  application  to  a  given  art ;  the  two  constitute 
the  partner  of  that  name  in  the  productive  firm.  It  should 
be  noticed  that  there  is  much  of  intellectual  service  con- 
curring in  the  production  of  wealth,  which  is  common, 
unappropriated  utility,  like  the  natural  agents,  light, 
heat,  rain,  &c.  Of  this  character  is  scientific  knowl- 
edge, and  useful  inventions  for  which  the  patents  have 
expired.  These  are  potent  auxiliaries  in  the  production 
of  wealth,  but  their  services  are  free  to  all  who 
choose  to  employ  them.  Artistic  and  intellectual  skill, 
are  however,  like  strength  of  muscle,  appropriated  pro- 
perty ;  and  the  proprietors  thereof  receive  for  every  out- 
lay of  them,  rewards  corresponding  with  the  magnitude 
of  the  streams. 

Here  I  might  proceed  to  demonstrate  the  fact,  that 
skill  and  labor  are  equal  partners  in  the  great  productive 
firm ; — that,  in  obedience  to  natural  laws,  they  contribute 
equal  amounts  of  capital,  render  like  quantities  of  service, 
and  receive  equal  shares  of  the  revenue.  To  do  this,  it 
would  be  only  necessary  to  take  for  my  premises  the 
laws  of  human  nature  and  the  general  principles  of 
wealth  already  noticed,  and  connecting  them  with  the 
fact  just  pointed  out,  that  wealth  cannot  be  produced  in 
the  absence  of  either  skill  or  labor,  deduce  therefrom  the 
derivative  laws  which  render  them  equal  partners.  I 
might  also  verify  the  deduction  by  the  observed  fact, 
that  the  preponderance  (in  service  and  profits,)  of  skill 
in  one  process  of  production,  begets  the  necessity  of  a 
corresponding  excess  of  labor  in  one  or  more  others,  and 
vice  versa;  as  well  as  by  other  evidences  which  observa- 
tion and  experience  afford.  But  since  the  argument  and 
illustrations  would  be,  in  the  main,  a  repetition  of  those 
already  presented  in  elucidation  of  a  kindred  principle, 
I  will  withhold  them,  and  thus  spare  the  reader's  patience. 


102  LAWS    OF    TRADE,  PART  I. 

If  those  presented  in  relation  to  land,  capital  and  indus- 
try, have  produced  conviction,  it  will  be  readily  perceived 
that  they  could  do  no  less  in  this  case  ;  if,  on  the  con- 
trary, they  have  failed  in  the  others,  they  would  be 
likely  to  fail  in  this  also.  I  will  only  add,  that  my  own 
convictions  of  the  truth  of  this  position  are  as  clear  and 
positive  as  they  are  in  reference  to  any  other  principle 
enunciated  in  this  work. 

We  find  then  that  skill,  labor,  capital  and  land,  are 
co-equal  partners  in  the  general  firm  of  production — their 
respective  proprietors  receiving  equal  shares  of  the 
gross  revenue  or  profits  ;  and  since  commerce  and  credit 
keep  their  respective  per  centages  of  profit  at  a  common 
standard,  it  follows  that  the  aggregate  value  of  each 
must  be  equal.  We  shall  also  find  in  the  sequel,  that 
the  aggregate  of  skill,  of  labor,  and  of  capital,  respective- 
ly, cost  the  same  to  produce;  while  land,  as  we  have  seen, 
cost  nothing.  If  I  have  failed,  through  unskilfulness  in 
the  use  of  language  and  ignorance  of  the  rules  of  logic, 
to  unfold  the  laws  by  which  nature  has  established  this 
equitable  partnership,  yet,  the  fact  of  its  existence  I 
hold  to  be  so  obvious  and  undeniable,  that  no  one  of 
ordinary  capacity  can  fail  to  perceive  it,  if  he  will  take 
the  trouble  of  contemplating  the  subject  for  himself. 

Assuming  these  premises  to  be  sound,  the  inference  is 
unavoidable,  that  the  greater  the  quantity  of  either  one 
of  the  prime  agents  of  production,  as  compared  with  the 
other  three,  the  lower  will  be  the  relative  profits  of  its 
individual  proprietors,  and  vice  versa.  Suppose,  for 
illustration,  that  100  represents  the  mean,  aggregate 
productive  power  of  each,  and  400  that  of  the  whole  ; 
then,  if  we  assume  the  profits  to  be  five  per  cent,  per 
annum,  20  represents  the  gross  annual  profits  of  pro- 
duction, and  5  the  share  of  each  prime  agent.  Now 


CHAP.  Ill,  AS    INFLUENCING   DISTRIBUTION,  103 

suppose  that  pestilence  or  other  causes  suddenly  reduce 
the  quantity  of  labor  and  skill  to  50  each  ;  capital  and 
land  respectively  remaining  at  100.    This  would  diminish 
the  aggregate  productive  power  by  one  quarter,  or  from 
400   to    300  ;    and  it   would  lessen  the   aggregate  net 
revenue  in  an   equal  degree,  namely,  from  20    to  15. 
The  last  named  quantity  being  divided,   as  our  prenri- 
ies  divide  it,  into  equal  shares,  would  give  to  each  class 
of   the  productive  forces   3f ;    consequently,    the   rate 
of  profits  on  capital  and  land  (each  of  which   remains 
at  100)  would  be  3 1  per  cent,  per  annum,   while  the 
rate   awarded   to   skill   and  labor  (which  are   reduced 
to   50  each,)  would  be  7i  per  cent.,  or  exactly  double 
that  of  capital  and  land.     In  other  words,  the  interest 
of  money  and  the  rent  of  land,  houses,  mills,  machinery, 
and  of  all  other  kinds  of  productive  capital,  would  be 
reduced  twenty-five  per  cent,  while  the  wages  of  labor 
and  the  rewards  of  skill  would  be  enhanced  fifty  per  cent. 
Such  would  be  the  first  consequence  of  a  sudden  and  violent 
disturbance  of  the  natural  equilibrium  of  the  productive 
forces,  of  the  character,  we  have  supposed.     Let  us  now 
trace  out  and  group  the  various  causes  concerned  in  the 
production  of  this  consequence,   and  see  whither  they 
tend  ultimately. 

The  diminution  of  population,  by  lessening  the  num- 
ber of  industrial  machines,  first  throws  out  of  employ- 
ment a  portion  of  the  capital  and  land ;  the  surpluses  of 
these  are  next  pressed  into  service  by  lowering  the  con- 
sideration demanded  for  their  alienation  and  for  their  use  : 
this  lessens  the  market  value  and  the  profits  of  capital 
and  land,  and  enlarges  the  profits  of  industry ;  the 
diminished  market  value  and  profits  of  capital  lessen  the 
demand  for  and  the  production  of  machinery,  while  the 
augmented  profits  of  industry,  by  setting  free  a  large? 


104  LAWS    OF    TRADE,  PART  I. 

number  of  desires,    increase   the   demand  for  and  the 
production  of  value  in  its  consumable  forms.     All  the 
causes  thus  set  in  motion,  it  will  be  perceived,  tend  to 
produce  a  diminution  of  productive  capitalj  and  with  it, 
of  course,  a   corresponding  contraction  of  the  market 
value  of  land.     Simultaneously  with  these,  other  influ- 
ences  are   put  in   motion  which   tend  to  increase   the 
quantity  of  labor  and  skill.     For  example  :  The  dimi- 
nution of  population  increases  the  rewards  of  industry, 
and  the  increased  rewards  of  industry  attract  population 
from  abroad.     Besides,  it  is  well  known  that  extreme 
wealth  and  extreme  poverty  are  both  unfavourable  to 
the  production  of  population,  as  well  as  to  the  wealth  pro- 
ducing capacity  of  those  who  occupy  these  extremes ; 
and  since  the   diminished  profits  of  capital  reduce  the 
revenue  of  the  rich,  while  the  increased  rewards  of  indus- 
try enhance  that  of  the  poor,  it  is  evident  that  the  event 
supposed  would  lessen  these  extremes,  and  thus  tend  to 
increase  both  the  number  and  the  productive  capabilities 
of  native  population.     We  find,  therefore,  that  a  sudden 
diminution  of  population  first  causes  the  profits  of  labor 
and  skill  to  increase,   and  those  of  capital  and  land  to 
diminish ;  and  that  these,  combined  with  other  causes 
simultaneously  put  in  action  by  the  disturbance,  cause 
productive  capital  and  the  market  value  of  land  to  con- 
tract  in    volume,  and   industry  to  expand    until  they 
meet   somewhere  between  the  points  from  which  they 
respectively  set  out.     But  neither  will  stop  there.     The 
impetus  with  which  they  started  will  carry  each  onward, 
until  they  have  changed  places  ;   then  a  reaction  takes 
place,  afterwards  another,  and  so  on,  with  lessening  in- 
tensity, until  the  natural  equilibrium  is  restored.     It  is 
thus  in  relation  to  every  sudden  or  unnatural  diminu- 
tion of  population.     And  whenever,  from   any  cause, 


CHAP.   III.       AS  INFLUENCING  DISTRIBUTION.  105 

the  increase  of  population  outstrips  the  growth  of  pro- 
ductive capital,  then  the  influences  of  these  principles 
are  inverted,  and  the  equilibrium  thereby  restored. 

The  same 'laws  prevail  in  relation  to  capital  also. 
Suppose,  for  example,  that  a  large  portion  of  the  product- 
ive capital  of  the  world  should  be  suddenly  destroyed  by 
the  elements,  or  by  any  other  cause.  This,  by  first  increas- 
ing the  profits  on  what  remained,  and  the  demand  for  and 
the  production  of  more — while,  by  lessening  the  rewards 
of  industry,  it  retards  the  production  of  children  for 
want  of  means  to  rear  them,  and  thins  the  existing  po- 
pulation by  starvation — would  thus  give  action  to  the 
laws  which  never  fail  to  restore  the  equilibrium,  ulti- 
mately. If,  on  the  contrary,  a  high  degree  of  productive 
skill,  combined  with  habits  of  industry  and  economy, 
should  cause  productive  capital  to  augment  more  rapidly 
than  population,  it  would  tend  to  lessen  the  profits, 
weaken  the  demand,  and  diminish  the  production  of  cap- 
ital ;  while,  by  increasing  the  rewards  of  industry,  it 
would  engender  an  augmented  demand  for  wealth  in  the 
forms  best  calculated  to  reproduce  labor  and  skill,  so 
that  in  this  instance  too,  the  natural  equilibrium  would 
be  speedily  restored. 

In  these  illustrations,  I  have  regarded  the  productive 
forces  as  units.     But  it  may  not  be  amiss  to  remark, 
that  the  principles  are  equally  applicable  to  equivalent 
sections  of  them,  whether  large  or  small.     If  we  confine 
our  survey  to  a  single  nation,  city,  or  village,  we  shall 
find  these  laws  presiding  over  the  distribution  of  wealth, 
and  maintaining  at  a  common  standard  the  respectiv^/ 
magnitudes  of  skill,  labor,  capital,  and  market  value 
of   land.     Indeed,   uniformity  of  action  may  be   said    / 
to  be  one  of  the   distinguishing  features  of  the  laws  ' 
of  trade.     We   may  go  into   a  workshop,   where   the 
10 


106  LAWS  OF   TRADE,  PART  I. 

different  processes  of  wealth  are  carried  on,  and  there 
find  exemplified  and  enforced  the  natural  laws  which 
govern  the  production  and  distribution  of  wealth  through- 
out the  commercial  world. 

Let  us  here  pause  for  a  moment  to  note  a  few  facts  of 
practical  importance  which  result  as  corollaries  from  the 
argument  just  adduced. — If  the  fundamental  laws  which 
govern  the  distribution  of  wealth  are  of  the  character  I 
have  endeavored  to  unfold,  then  it  is  obvious  :  1,  That, 
as  regards  any  given  nation  or  community,  the  influx  of 
foreign  population  without  capital,  lessens  the  relative 
profits  of  industry  and  enlarges  those  of  capital  and 
land — in  other  words,  injures  the  poor  and  benefits  the 
rich.  2,  That  the  efflux  of  population  without  capital, 
benefits  the  remaining  poor  and  injures  the  rich.  3, 
That  the  influx  of  capital  without  population,  enhances 
the  profits  of  industry  and  land,  and  lessens  those  of 
capital.  4,  That  the  acquisition  and  preservation  of 
capital  by  individuals,  not  only  enriches  themselves  but 
benefits  the  poor,  while  the  consumption,  by  its  owners, 
of  previously  amassed  wealth,  lessens  the  revenue  of  all 
except  those  who  remain  rich, — in  other  words,  that  in- 
dividual economy  is  a  social  benefit,  and  individual  ex- 
travagance a  social  injury. — It  is  scarcely  necessary  to 
observe,  that  these  consequences  are  not  permanent. 
They  may  continue  in  some  cases  for  a  generation,  or 
even  longer,  but  according  to  our  theory,  they  must 
sooner  or  later  give  place  to  those  of  a  contrary  kind. 

But  to  return  to  the  subject  of  profits,  and  the  relative 
magnitude  of  the  productive  forces.  We  have  seen 
that  an  excess  of  population  curtails  the  rewards  of  in- 
dustry, and  enlarges  those  of  capital ;  that  an  excess  of 
capital  produces  results  the  reverse  of  these ;  but  that 
natural  law  ultimately  restores  the  equation  both  of 


CHAP.  III.       AS  INFLUENCING  DISTRIBUTION.  10T 

magnitudes  and  profits.  Let  us  now  ascertain  the  prin- 
ciples connected  with  the  productive  agent.  Land,  in 
which  there  is  no  fluctuation  of  quantity. 

Land,  as  I  have  said  before,  is  the  gift  of  nature :  it 
costs  nothing  to  produce,  it  requires  no  renewal,  it  con- 
sumes nothing.  The  last  clause  of  this  assertion  will  be 
disputed  by  many,  and  I  am  willing  to  admit  that  land 
may  be  impoverished  by  careless  and  unskilful  culture, 
as  well  as  fertilized  by  manures  ;  but  I  maintain  that, 
with  ordinary  care  and  skill  in  the  cultivator,  its  native  iX 
fertility  may  be  kept  up  without  the  use  of  other  fer- 
tilizers than  those  afforded  in  its  own  refuse  products. 
This  is  all  the  assertion  means ;  and  its  truth  is  in  some 
measure  confirmed  by  the  fact  that  city  lots  consume  no- 
thing, although  they  concur  in  production,  and  in  their 
market  value  fully  reflect  the  true  value  of  the  capital 
placed  upon  them. 

Land,  in  any  given  locality,  is  invariable  in  quantity.  ^ 
Its  market  value  expands  and  contracts  as  the  other 
three  productive  forces  augment  and  diminish,  but  its 
productive  powers  remain  stationary.  Therefore,  where 
population  is  sparce,  each  concurrent  group  of  the 
productive  forces  embraces  more  of  the  productive 
power  of  land,  than  where  population  is  dense.  The 
greater  the  native  fertility  of  land,  and  the  larger  the 
quantity  each  individual  may  have  of  it  to  concur  with 
his  industry  and  capital,  the  larger  will  be  the  product- 
ion of  value,  and  hence,  the  higher  the  rate  of  profits, 
because  there  is  not  a  corresponding  increase  of  cost — 
or  rather,  the  cost  element  of  value  remains  stationary 
while  its  gross  quantity  is  enlarged.  The  market  value  of 
land  being,  in  all  cases,  exactly  equal  to  that  of  the  pro- 
ductive capital  placed  upon  it,  it  follows  that  where  po- 
pulation and  capital  are  relatively  scarce,  its  price 


108  LAWS    OF    TRADE,  PART  I. 

must  be  proportionately  low  ;  and  the  lower  the 
price  of  land  the  higher  the  rate  of  profits  inuring 
to  its  proprietors,  as  well  as  to  the  propertiors  of 
the  concurring  skill,  labor,  and  capital,  for  they  all 
share  alike. 

These  considerations  warrant  the  conclusion,  that  the 
market  value  of  land  and  the  profits  of  production  move 
inversely — when  the  one  ascends  the  other  descends  ; 
that  productive  capital  and  population  augment  and 
diminish  in  unison  ;  that  the  market  value  of  land  at  all 
times  exactly  equals  the  value  of  the  productive  capital 
placed  upon  it ;  and  hence,  that  its  market  value  will  be 
highest,  and  the  profits  of  production  lowest,  where 
population  is  most  dense,  and  vice  versa.  This  princi- 
ple is  of  universal  prevalence  as  regards  different  coun- 
tries or  political  communities,  but  it  is  not  applicable,  of 
course,  as  between  city  and  country.  In  these  cases, 
the  capital  and  industry  in  each,  is  employed  in  distinct 
departments  of  production,  the  commercial  and  the 
agricultural ;  and  it  is  well  known  that  the  latter  re- 
quires, in  the  production  of  a  given  quantity  of  value, 
the  concurrence  of  more  land  than  the  former. 

The  principle  thus  deduced  is  completely  verified  by 
every  man's  experience  and  observation.  Illustrations 
present  themselves  on  every  side,  but  I  will  content  my- 
self by  merely  referring  to  one  of  a  most  convincing 
character. — In  the  valley  of  the  Mississippi,  where  the 
market  value  of  unimproved  lands  of  great  natural  fer- 
tility, is  but  $l,TYo-  per  acre,  the  interest  of  money,  and 
the  profits  of  capital  generally,  range  from  ten  to  twelve 
per  cent,  per  annum;  in  the  agricultural  districts  of 
New  York,  where  the  market  value  of  unimproved 
lands,  or  of  cultivated  lands  aside  from  the  ameliora- 
tions, is,  on  an  average,  about  $30  per  acre,  the  profits 


CHAP.   III.        AS  INFLUENCING  DISTRIBUTION.  109 

on  production,  as  indicated  by  the  interest  of  money, 
range  from  five  to  seven  per  cent. ;  and  in  the  densely 
peopled  sections  of  Europe,  where  the  market  value 
of  agricultural  land,  aside  from  its  improvements,  will 
average  more  than  $100  per  acre,  the  annual  profits  on 
production,  as  shown  by  the  same  indicator,  range  from 
two  to  four  per  cent.  In  the  first  named  locality, 
population  is  sparce,  in  the  second  it  is  medium,  in  the 
third  it  is  dense,  which  not  only  accounts  for  the  dispar-  i/ 
ity  of  profits  but  confirms  the  soundness  of  our  theory. 
The  half  fed  populace  of  over-peopled  Europe,  without 
any  knowledge  of  the  natural  laws  which  preside  over 
the  profits  of  production,  have  perceived  the  statistical 
facts  just  named,  and  true  to  the  promptings  of  self- 
interest,  we  find  them,  with  their  faces  turned  hitherward, 
leaving  their  homes  as  rapidly  as  they  can  find  ships  to 
carry  them ;  and  after  landing  on  our  shores,  wending 
their  way  to  the  cheap  and  fertile  lands  of  the  west. — 
The  attraction  of  cheap  and  fertile  land,  everywhere,  is 
constantly  drawing  to  it  an  increase  of  industry  and 
capital,  and  but  for  the  strong  ties  which  bind  man  to 
the  place  and  country  of  his  nativity,  together  with  the 
diversity  of  language,  government  and  climate,  it  would 
equalize  industry,  capital  and  land  throughout  the  world. 
Even  in  the  face  of  these  hindrances,  the  tendency 
towards  that  ultimate  result  is  very  rapid,  and  sooner  or 
later  it  will  be  accomplished. 

Let  us  see  how  far  we  have  progressed.  It  has  been 
shown  that  the  oscillations  of  profits  preserve  the  equation 
of  skill,  labor,  capital,  and  the  market  value  of  land — 
chaining  each  to  a  common  standard  of  magnitude :  that 
the  oscillations  of  profits  also  tend  to  condense  the  market 
value  of  land  when  it  is  inflated,  and  to  expand  it  when 
compressed,  so  as  to  produce  not  only  an  ultimate  uni- 
10* 


HO  LAWS    OF   TRADE,  PART  I. 

formity  everywhere,  but  also,  a  correspondence  between 
the  market  value  and  the  productive  capacity  of  land.  It 
now  remains  to  show  the  ultimate  law  of  profits — that 
law  to  which  all  the  others  are  subordinate,  and  which 
keeps  the  profits  of  production,  with  slight  oscillations, 
gravitating  about  the  point  of  five  per  cent,  per  annum. 
But  since  it  will  be  necessary,  in  the  exposition  of  this 
law,  to  adopt  as  premises  some  of  the  principles  which 
preside  over  the  consumption  of  wealth,  it  is  deemed 
best  to  pass  those  in  review  first. 


SECTION   III. 

Of  Consumption. 

Having,  in  the  two  preceding  sections,  endeavored  to 
point  out  the  general  principles  that  govern  the  produc- 
tion and  distribution  of  wealth,  it  now  remains  to  unfold 
those  which  control  its  destiny.  After  having  investi- 
gated this  section  of  the  laws  of  trade,  we  shall  be  pre- 
pared to  contemplate  them  as  a  whole,  and  to  determine 
whether  the  separate  parts  of  our  theory  in  reference  to 
them,  harmonize.  I  have  no  misgivings  on  this  point ; 
but  on  the  contrary,  am  satisfied,  that  when  we  come 
to  contemplate  the  subject  from  that  point  of  view,  we 
shall  be  able  to  see  the  truthfulness  of  the  theory  with 
far  more  clearness  than  we  have  yet  seen  it ;  for  besides 
the  imperfect  manner  in  which  the  subject  is  treated  in 
these  sections,  the  different  parts  of  the  laws  of  trade 
are  so  woven  together  by  reciprocal  influences,  that  it  is 
impossible  to  obtain  a  clear  knowledge  of  either  section, 
until  we  have  considered  them,  first  by  themselves,  and 
afterwards  together  as  parts  of  a  mutually  dependent 
system. 


CHAP.  III.       AS  INFLUENCING  CONSUMPTION.  Ill 

As  relates  to  the  section  of  these  laws  that  we  are  now 
to  consider,  it  will  be  remembered  that  my  thesis  is : 

1,  That  the  portion  of  value  constituting  the   cost  of 
production  returns  to  the  sources  whence  it  emanates, 
and  is  there  consumed  in  the  preservation  and  reproduc- 
tion of  skill,   labor,    capital,   government  and  money  ; 
that  the  portion  constituting  the  profits  is  applied  in 
part  to  the  augmentation  of  skill,  labor  and  capital,  and 
the  balance  to  the  gratification  of  the  non-essential  desires 
of  its  owners, — the  productive  forces  now  existing  being 
the  accumulated  profits  of  the  present  and  all  preceding 
generations. 

2,  That  the  profits  of  production  in  the  aggregate, 
vibrate  within  limits  bounded  by  2|  per  cent,  per  an- 
num and   7|   per    cent,    per   annum,  being   not   only 
restrained  from  transcending  these  limits  by  starvation 
on  the  one  side  and  by  a  dense  crowd  of  liberated  de- 
sires on  the  other,  but  also,   driven  back  towards  the 
centre  by  the  undue  consumption  of  capital  at  the  one 
extreme  and  of  population  at  the  other. 

We  will  now  proceed  to  consider  the  phenomena  pre- 
sented in  the  consumption  of  wealth,  in  doing  which,  it 
will  be  my  aim,  among  other  things,  to  demonstrate  the 
truth  of  the  foregoing  propositions. — It  is  familiar 
knowledge  that  human  offspring  must  be  fed,  clothed, 
housed,  lodged,  and  nursed  in  infancy  and  in  sickness, 
for  a  series  of  years,  before  their  muscular  powers  are 
sufficiently  developed  to  yield  the  productive  service,  la- 
bor ;  that  a  still  longer  term  of  years  is  necessary  to 
educate  them  in  the  arts  of  production  so  as  to  yield  the 
service  called  skill ;  and  that  the  laws  of  society,  as  well 
as  parental  affection,  enjoin  these  duties  upon  their 
parents.  The  value  thus  consumed  must  be  regarded 
as  the  cost  of  producing  Skill  and  Labor,  When  the 


112  LAWS    OF    TRADE,  PART  I. 

bodily  and  mental  powers  of  children  have  been  thus 
matured  at  the  expense  of  their  parents,  they  take  their 
places  in  the  laboratory  of  production  as  independent 
proprietors  of  industry.  Thenceforward  they  must  be 
fed,  clothed,  housed,  lodged,  and  nursed  in  sickness  as 
before.  These  are  the  consumptions  incident  to  the 
repair  and  preservation  of  industrial  agents.  But  not- 
withstanding the  outlay,  they  are  preserved  for  a  limited 
period  only  :  disease,  accident  and  exhaustion,  sooner  or 
later  destroy  their  productive  powers.  Meanwhile,  how- 
ever, fresh  agents  are  produced  to  occupy  their  place, — 
the  renewal  being  effected  in  the  manner  just  pointed  out. 
In  the  production,  preservation  and  renewal  of  cap- 
ital, a  similar  consumption  of  value  takes  place — not 
indeed  of  value  in  the  form  of  food,  clothing,  and  the 
like,  but  of  the  direct  service  of  industry,  capital  and 
land.  For  instance,  in  the  fabrication  of  the  simplest 
instrument  of  production,  human  agency  must  furnish 
the  skill  and  labor,  capital  the  tools,  and  land  the  raw 
material  together  with  the  use  of  the  ground  on  which 
the  work  is  performed.  The  valuable  service  thus  con- 
sumed in  the  fabrication  of  productive  machines  and  im- 
plements, constitutes  the  cost  of  producing  capital. 
These  machines  deteriorate  by  use  and  exposure,  so  that 
similar  service  is  consumed  in  their  maintainance  and 
repair  :  this  constitutes  the  cost  of  preserving  capital. 
And  finally,  the  productive  power  of  machines,  like  that 
of  industrial  agents,  is  ultimately  destroyed  by  casualty 
or  exhaustion,  so  that  capital  also  requires  renewal. 
And  it  is  worthy  of  notice  that  the  mean  duration  of 
productive  machines  is  about  the  same  as  that  of  human 
life,  as  appears  from  the  fact  that  experience  has  taught 
underwriters  to  charge  about  equal  rates  of  premium  for 
guaranteeing  their  preservation. 


CHAP.  III.       AS  INFLUENCING  CONSUMPTION.  113 

The  Government  Machine  is  also  a  great  consumer.  It 
is  a  powerful  auxiliary  in  the  production  and  preservation 
of  wealth,  and  its  active  co-operation  is  so  beneficial  that 
producers  can  well  afford  to  pay,  in  the  form  of  taxes, 
whatever  share  of  the  product  is  requisite  to  its  efficien- 
cy ;  but,  unfortunately,  its  voracious  appetite  is  rarely 
satisfied  with  so  small  a  share. 

Money  costs  no  inconsiderable  amount  in  its  produc- 
tion, but  inasmuch  as  it  costs  but  little  for  repairs,  and 
seldom  needs  renewal,  its  gross  consumptions  are  trifling 
compared  to  those  of  government.  Some,  no  doubt, 
will  question  the  propriety  of  excluding  money  from 
that  class  of  productive  agency,  termed  capital ;  but  it 
appears  to  me  there  are  good  reasons  for  doing  so. 
Money,  like  government,  is  a  social  expedient  or  general 
machine,  designed  to  benefit  society  by  giving  incidental 
aid  to  every  producer.  It  therefore  belongs  to  the 
class  of  social  auxiliaries,  rather  than  to  that  of  capital. 

These  are  the  only  kinds  of  consumption  that  enter 
into  the  cost  of  production.  Taken  together,  they  con- 
stitute that  class  which  has  been  well  termed  reproduct- 
ive consumptions.  Land,  the  other  productive  agent, 
I  beg  to  repeat,  costs  nothing.  It  has  been  furnished 
gratis,  it  needs  no  repair,  it  is  never  destroyed,  nor  is 
its  productive  power  lessened  by  use,  under  a  judicious 
system  of  cultivation :  it  consumes  no  portion  of  the 
value  that  it  helps  to  create.  As  a  source  of  production, 
its  services  are  gratuitous  ;  as  a  legal  partner  in  the 
producing  firm,  its  owners  are  entitled  to  a  share  of  the 
revenue.  The  other  prime  agents  and  auxiliaries  are, 
however,  as  indicated  above,  great  consumers.  Their 
repair,  preservation,  and  renewal,  swallow  up  the  major 
part  of  their  joint  progeny.  The  minor  part,  which 
remains,  is  the  net  revenue  or  profits  of  production. 


114  LAWS    OF   TRADE,  PART  I. 

This  is  consumed  in  various  ways  (according  to  the  taste 
or  caprice  of  its  different  owners,)  all  of  which,  however, 
may  be  conveniently  arranged  into  three  classes,  and  thus 
designated  ;  1,  in  the  augmentation  of  the  productive 
forces ;  2,  in  the  gratification  of  the  senses  ;  3,  in  the 
satisfaction  of  mental  desires. 

As  relates  to  the  class  of  consumptions  first  named,  it 
is  to  be  observed  that  nature  has  limited  them  to  3J  per 
cent  per  annum,  under  the  most  favoring  circumstances 
for  an  increase  of  population  and  capital — in  all  other 
cases,  still  lower.  The  statistics  of  population  have 
shown  that  under  the  most  favorable  conditions,  as  it 
respects  health  and  all  the  other  requisites  of  increase, 
the  births  do  not  exceed  the  deaths,  annually,  more  than 
3|-  per  cent,  on  the  existing  amount  of  population. 
When  we  reflect  that  not  more  than  one  eighth  of  the 
population  are  of  the  proper  sex,  age  and  condition  for 
bearing  children,  and  that  these  cannot  produce,  on  an 
average,  more  than  one  each  in  two  years,  which  gives 
6  per  cent,  of  births  ;  and  that  the  deaths  in  a  climate 
of  ordinary  healthfulness  average  2^  per  cent — we  must 
perceive  at  once  that  these  limits  cannot  be  transcended, 
rarely  indeed  reached.  Where  the  extremes  of  wealth 
and  poverty  abound,  or  where  the  climate  is  unhealthy, 
or  population  dense,  the  net  annual  increase  cannot  ex- 
ceed 1 1  per  cent. ;  whence  it  is  clear  that  the  law  of  in- 
crease to  which  population  is  subordinate,  does  not  per- 
mit the  average  rate  to  exceed  2£  per  cent,  per  annum. 
Neither  can  capital  augment  more  rapidly,  since,  as 
already  shown,  its  rate  of  increase  is  governed  by  and  is 
equal  to  that  of  population.  Therefore,  we  may  safely 
conclude  that  2£  per  cent,  per  annum,  or  one  half  the 
net  profits  derived  from  industry  and  capital,  is  all  the 
value  that  can  be  absorbed  by  this  class  of  consumers. — 


CHAP.  III.       AS   INFLUENCING  CONSUMPTION.  115 

The  second  and  third  class — the  senses,  and  the  mental 
desires — each  importune  the  intellect,  through  the  desire 
of  happiness,  for  all  the  profits  that  remain — namely, 
the  entire  profits  of  land,  and  half  those  of  industry  and 
capital,  or  five-eighths  of  the  whole.  The  judgment  usually 
observes,  however,  a  laudable  degree  of  impartiality  in 
making  the  distribution;  for  it  awards  to  each  class 
about  an  equal  share  of  the  remaining  profits,  to  which 
in  truth  they  are  both  fairly  entitled,  by  having  been 
equally  instrumental  in  their  production. 

As  regards  the  second  class  it  may  be  said  :  The  eye 
is  constantly  appealing  for  something  new  and  beautiful 
to  look  upon ;  the  ear,  for  pleasing  and  harmonious  sounds ; 
the  sense  of  smell,  for  fragrant  and  pungent  odors ;  the 
palate,  for  savory  delicacies  in  food  and  drink  ;  the  sense 
of  feeling,  for  all  kinds  of  bodily  enjoyments  or  plea- 
surable sensations,  and  for  the  removal  of  pain.  Much 
of  value  is  consumed  in  quieting  the  urgency  of  these 
appeals — probably  not  less  than  the  share  of  profits  in- 
dicated above. 

The  third  class  is  made  up  of  a  more  numerous  host, 
being  no  less  than  the  whole  family  of  mental  desires 
and  sentiments.  Of  these  it  will  be  sufficient  to  name 
a  few  of  the  most  importunate,  and  point  out  the  nature 
of  their  wants :  Veneration  demands  the  trappings  of 
public  worship  ;  benevolence,  the  means  of  practical 
munificence  ;  fear,  fitting  guards  for  securing  personal 
safety  ;  pride,  costly  ornaments  for  ostentatious  display ; 
ambition,  the  means  of  securing  its  aims  ;  and  so  on, 
until  last  of  all,  though  not  least,  the  Intellect — the 
progenitor  and  governor  of  this  wonderful  phenomenon — 
reserves  to  itself  no  inconsiderable  share  of  the  net  re- 
venue, as  a  means  of  aiding  its  advances  on  the  path- 
ways of  truth. 


116  LAWS    OF    TRADE,  PART  I. 

Such  are  the  consumers  of  wealth.  No  member  of 
society  is  free  from  the  importunity  of  any  one  of  them, 
for  they  are  all  either  ingredients  of  human  nature  or 
unavoidable  accompaniments  of  the  social  condition. 
They,  however,  differ  in  their  degrees  of  strength  in  dif- 
ferent individuals,  their  relative  and  absolute  strength 
in  each  case  being  governed  by  the  peculiar  mental 
and  physical  organism  that  nature  and  circumstances 
have  awarded  to  the  individual. — After  satisfying  the 
imperative  wants  of  life  and  of  capital  (including  their 
permitted  increase,)  and  the  wants  of  government  and 
money,  the  remaining  profits  must  necessarily  be  con- 
sumed unproductively  ;  and  it  is  sufficiently  clear  that 
those  to  whom  they  belong  will  distribute  their  respect- 
ive shares  amongst  their  non-essential  desires,  in  such 
manner  as  the  judgment  of  each  shall  indicate  as  the 
best  calculated  to  promote  his  own  happiness. 

We  have  now  reached  a  favorable  position  for  consider- 
ing some  of  the  higher  laws  to  which  profits  are  sub- 
ject. We  have  seen  by  what  agencies  they  are  produced, 
how  they  are  distributed,  and  in  what  manner  consumed ; 
and  we  have  seen  that  their  present  average  rate  in  the 
world-wide  field  of  production,  is  about  five  per  cent,  per 
annum.  It  is  important  that  we  know  by  what  influ  - 
ences  this  rate  is  governed.  Is  it  the  offspring  of  chance, 
and  liable  to  change  with  every  variation  of  circum- 
stances in  the  field  of  production  ?  Or  do  the  natural 
laws  of  trade  establish  a  standard  rate,  from  which  the 
profits  of  production  cannot  depart  without  giving  ac- 
tion to  causes  which  tend  to  bring  them  back  ?  I  have 
advanced  the  opinion  that  they  do  establish  such  a  rate, 
and  will  now  proceed  to  demonstrate  the  correctness  of 
that  opinion. 


CHAP.    III.J  LAWS    OF   TRADE.  117 

§  In  the  first  place,  we  will  consider  the  commercial 
world  as  a  single  field  of  production,  and  we  will  assume 
that  the  standard  rate  of  profit  is  5  p.  ct.  per  annum  ; 
that  its  establishment  and  maintenance  requires  the 
existence  of  productive  capital  in  the  proportion  of 
$500  to  an  adult  citizen  or  industrial  agent — the 
market  value  of  land  being,  of  course,  as  much  more ; 
and  that  the  mean  cost  of  rearing  and  educating  chil- 
dren, (including  the  value  consumed  by  those  that 
die  before  reaching  their  majority,)  is  equal  to  both- — 
namely  $1,000  each.  Assuming  this  to  be  the  present 
and  the  natural  condition  of  things  in  the  general  field 
of  production,  let  us  next  suppose  the  rate  of  profit  to 
be  suddenly  lowered  by  some  cause  that  will  permantly 
diminish  the  results  of  productive  effort — say  by  an 
adverse  change  in  the  seasons.  What  would  be  the  con- 
sequences 1  Before  attempting  to  trace  them  out,  it 
will  be  well  to  estimate  the  expenses  or  reproductive 
consumptions  incident  to  agriculture. 

If  we  were  to  take  50  acres  of  land  and  incorporate 
with  it  $1,000  of  capital,  in  the  form  of  improvements 
and  implements  of  husbandry,  and  employ  two  indivi- 
duals in  its  cultivation,  we  would  have  (according  to  our 
hypothesis,)  a  group  of  productive  agents,  equal  in  value 
to  $4,000 ;  and  which  would  produce  $200  of  net  pro- 
fits annually.  Land  of  medium  fertility  will  produce 
about  20  bushels  of  wheat  per  acre,  so  that  if  the  culti- 
vation were  confined  to  that  plant,  the  gross  value  pro- 
duced, (estimating  wheat  at  one  dollar  per  bushel,)  would 
be  equalto  $1,000  ;  which  gives  $800,  or  four-fifths  of 
the  gross  product,  as  the  cost  portion,  or  the  share  re- 
quired to  sustain  and  preserve  the  agents  employed. 
This  is  probably  about  a  fair  estimate  of  the  reproduc- 
tive consumptions  incident  to  agriculture.  If  so,  a  slight 
11 


118  LAWS    OF    TRADE.  [PART    II. 

withholding  of  nature's  accustomed  bounty,  would  seem 
to  be  sufficient  to  prevent  the  realization  of  profits  in 
that  department  of  production ;  for  whenever  the   yield 
falls  so  much  as  one-fifth  below  the  average,  the  pro- 
ducts are  all  consumed  in  the  mere  maintenance  of  the 
agents  producing  them,  leaving  nothing  for  the  gratifi- 
cation of  non-essential  desires,  nor  for  the  increase  of 
population  and  capital.     It  is  to  be  noticed,   however, 
that  the  losses  consequent  on  a  diminution  of  products  in 
agriculture,  do  not  fall  exclusively  on  those  engaged  in 
that  pursuit,  but  are  so  distributed  as  to  fall  with  equal 
severity  on  all  classes  of  producers.     For  instance,  the 
diminished  yield   enhances   the   value  and  price  of  the 
products ;  all  men  are  consumers  of  agricultural  pro- 
ducts ;  therefore,  all  must  share  in  the  loss.     But  inas- 
much as  the  major  part  of  the  productive  agency  of  the 
world  is   employed  in   agriculture,  it  is   evident   that  a 
diminution  of  results  in  that  department,   equal  to  two- 
fifths  of  the  average  yield,  would,  at  first,  prevent  the  rea- 
lization of  profits  in  all  departments ;  because,  in  that 
event,  the  whole  value  produced  would  be  re-absorbed 
by  the  agents  producing  it,  unless  I  have  over  estimated 
the  cost  of  agricultural  products.     But  whether  I  have  es- 
timated the  cost  element  of  value,  as  compared  with  its 
profit  element,  too  high  or  too  low ;  and  whether  it  re- 
quires a  diminution  of  results,  in  agricultural  service,  of 
more  or  less  than  40  per  cent.,  to  suppress  the  element 
of  profit  in  all  products,  are  points  not  very  material.     It 
suffices  our  present  purpose  to  know  the  law  and  its  ten- 
dency in  such  cases — to   know,  for  instance,  that  the  / 
value  of  products  is  made   up  of  cost  and  profit,  and 
that  the  profit  element  may  be,  for  a  time,  entirely  sup- 
pressed by  adverse  causes  :  which   general   truths   are 
too  manifest  to  require  farther  illustration. 


CHAP.    III.]  LAWS    OF    TRADE.  119 

Let  our  supposition  then  be,  that  the  change  in  sea- 
sons is  sufficiently  adverse  to  suppress  all  profits.  What 
would  be  the  consequences  of  such  an  event  1  Let  us 
trace  them  out,  and  ascertain  their  ultimate  tendency. 

In  the  first  place,  it  is  obvious  that  population  would 
go  on  increasing  at  the  usual  rate  of  2J-  per  cent,  per 
annum*  until  checked  by  starvation,  which  last  would  be 
an  ulterior,  not  an  immediate  consequence.  The  rich, 
meanwhile,  would  continue  to  gratify  their  non-essential 
desires ;  and  since,  in  the  aggregate,  there  are  no  profits 
applicable  to  that  or  any  other  purpose,  it  is  evident 
that  a  part  of  the  existing  capital  must  be  consumed ; 
for  it  is  to  be  noticed  that  wealth,  in  many  of  its  forms, 
may  be  either  directly  consumed  or  kept  at  service  as  a 
productive  agent.  Therefore,  the  first  consequences  of 
the  event  supposed,  would  be  an  increase  of  population 
and  a  decrease  of  capital.  These  consequences  would 
necessarily  cause  the  rewards  of  capital  to  be  relatively 
higher  than  those  of  industry,  because  the  supply  of  the 
latter  would  exceed  the  demand  for  it,  while  that  of  the 
former  would  not  equal  the  demand  ;  and  since,  according 
to  our  supposition,  there  are  no  absolute  profits  pro- 
duced, it  follows  that  capital  would  continue  to  realize 
a  slight  degree  of  profit,  and  industry  an  equal  degree  of 
loss.  And  inasmuch  as  industry,  when  its  accustomed 
profits  are  withheld,  has  nothing  to  lose  but  itself,  it  is 
manifest  that  less  of  value  must  be  consumed  in  its  pro- 
duction and  maintenance ;  it  must  feed  on  less  costly 
products  arid  clothe  in  cheaper  fabrics — in  other  words, 
the  standard  of  the  necessaries  of  life  must  be  lowered. 
This  of  itself  lessens  the  cost  of  the  productive  agents 
Industry,  and  thereby  tends  to  bring  its  aggregate  value 
down  to  that  of  the  diminished  capital ;  but  there  are 
also  oiher  influences  tending  to  the  same  end-  Ii  is 


120  LAWS    OF    TRADE.  [CHAP.  III. 

known  that  in  all  communities,  including  the  most  pros- 
perous, there  is  an  unfortunate  class  who  are  compelled 
to  choose  between  starvation  and  public  charity  ;  and 
that,  from  this  extreme  depth  of  poverty,  the  pecuniary 
condition  of  the  different  classes  ascends  by  almost  im  - 
perceptible  gradations,  up  to  the  highest  degree  of  wealth. 
The  losses  on  industral  service  force  the  next  higher 
classes  down  to  a  level  with  the  lowest,  whereupon  famine 
and  its  attendant  pestilence  quickly  thin  their  crowde(J 
ranks ;  for  the  records  of  history  compel  us  to  own,  that 
the  charities  of  society  (under  the  restraints  imposed  by 
necessity  and  by  choice,)  are  too  cold  and  sparing  to 
prevent  that  melancholy  result.  Simultaneous  action  is 
also  given  to  another  cause  of  like  tendency,  namely : 
The  increased  difficulty  of  providing  for  offspring  deters 
the  more  prudent  and  reflecting  of  the  poor  from  mar- 
riage ;  which,  by  restraining  procreation,  tends  to  dimin- 
ish population. 

It  will  be  readily  perceived  that  the  joint  effect  of 
these  three  causes  must  be  a  rapid  decrease  in  the  value 
of  industry ;  for,  while  famine  and  restrained  procreation 
diminish  its  quantity,  the  reduced  amount  of  value  con- 
sumed by  both  adults  and  children,  lessens  the  cost  of 
that  which  remains.  We  may  safely  conclude,  there*- 
fore,  that  the  next  important  consequence  of  the  event 
supposed,  would  be,  a  decrease  in  the  quantity  and  cost 
of  industry,  equal  to  the  antecedent  decrease  in  the 
quantity  and  cost  of  capital,  and  in  the  market  value  of 
land.  This  would  restore  the  equality  of  rewards,  so 
that  neither  profits  nor  losses  would  accrue  to  the  owners 
of  either  class  of  the  productive  agents — the  share  of 
each  class  being  just  sufficient  to  sustain  the  agents 
themselves.  Meanwhile,  however,  the  more  wealthy 
would  still  permit  the  gratification  of  their  non-essential 


CHAP.   III.J  LAWS   OF    TRADE.  121 

desires ;  and  since  the  consequence  last  noticed  would 
again  deprive  them  of  revenue,  it  is  evident  that  they 
would  make  another  inroad  on  their  reserved  profits,  and 
thus  consume  another  portion  of  the  productive  agent-, 
Capital.  This  gives  renewed  action  to  the  causes  noticed 
above,  and  hence,  must  inevitably  end  in  another  thin- 
ning out  of  population,  by  destroying  the  poorest  class, 
and  by  restraining  the  procreative  propensities  of  the 
class  next  above  it.  But  while  in  every  diminution  of 
capital  and  population,  the  market  value  of  land  contracts 
so  as  to  keep  on  a  level  with  the  value  of  skill,  labor 
and  capital  respectively,  it  must  not  be  forgotten  that 
the  actual  quantity  and  productive  capacity  of  land 
remains  the  same  as  at  first ;  whence  it  is  manifest  that 
the  proportion  of  land,  in  every  concurrent  group  of  the 
productive  agents,  will  be  relatively  larger  than  it  was 
before  the  diminution  of  the  other  agents  took  place ; 
and  since  Land-,  unlike  the  other  agents,  is  a  producer/ 
without  being  a  consumer,  it  follows  that  every  diminu- 
tion of  capital  and  population  tends  to  enhance  tjie 
profits  of  production.  So  certain  is  this  law,  and  so 
uniform  in  its  operation,  that  spares  populations  may 
exist  with  scarcely  the  semblance  of  industry  and  capital ; 
as  witness  the  Aborigines  of  this  continent,  and  the  less 
civilized  division  of  the  human  family  everywhere. 
Therefore,  the  ultimate  tendency  of  the  event  supposed, 
is,  to  diminish  population  and  capital,  until  the  relative 
preponderancy  of  land  becomes  sufficient  to  restore  the 
original  standard  of  profits ;  and,  in  case  nature  should 
never  return  to  her  accustomed  bounty,  such  would 
certainly  be  the  ultimate  economic  consequence.  Any 
other  permanent  cause  of  restraint  in  the  production  of 
wealth,  or  of  acceleration  in  its  consumption,  would  of 
course  produce  a  similar  result.  So,  on  the  other  hand, 

11* 


122  LAWS    OF   TRADE.  [PART.  II. 

a  permanently  favorable  change  in  the  seasons,  or  in 
economic  legislation^  or  in  the  science  and  arts  of  pro- 
duction, would  give  inverted  action  to  the  same  class  of 
laws,  and  therefore,  would  produce  consequences  directly 
opposed  to  those  I  have  pointed  out.  For  instance,  if 
nature,  after  having  produced  the  ultimate  consequences 
just  noticed,  should  return  to  her  former  standard  of 
bounty,  the  abundance  and  cheapness  of  land,  when 
thus  aided  by  favoring  seasons,  would  enlarge  profits ; 
the  enlarged  profits  would  cause  population  and  capital 
to  increase,  and  as  the  latter  increased,  the  market 
value  of  land  would  increase  in  an  equal  degree  ;  until, 
finally,  the  plethora  of  population  and  capital,  and  the 
consequent  clearness  of  land,  would  again  reduce  profits 
to  the  standard  rate,  These  positions  may  be  verified 
by  referring  to  the  past  history,  the  present  condition, 
and  the  probable  future  of  our  own  country  ;  for  it  is  to 
be  remarked  that  our  original  condition,  in  respect  of 
wealth,  was  analagous  to  that  of  a  community  revisited 
by  fruitful  seasons  after  its  ranks  had  been  thinned,  and 
its  capital  diminished,  by  adverse  ones.  Our  history 
shows  that  the  profits  of  production,. (as  indicated  by  the 
rate  of  interest,)  have  been  hitherto  much  higher  in  this 
country  than  their  average  for  all  countries  ;  they  have 
averaged  here,  not  less  than  seven  and  a  half  per  cent, 
per  annum,  while  their  general  average  for  all  countries 
does  not  exceed  five  per  ct.  I  am  aware  that  this  differ- 
\  ence  is  usually  attributed  to  the  favoring  tendencies  of 
our  political  institutions,  and  the  equally  favoring  charac- 
teristics of  our  people.  I  am  willing  to  admit  that  these 
causes  favor  the  result,  but  our  superabundance  of  fertile 
land  is  evidently  the  chief  cause  of  that  difference ;  and 
not  only  so,  but  the  chief  cause  also  of  the  superior 
vigor,  skill  and  enterprise  of  our  people,  as  may  be  readily 
shown. 


CHAP.  III.J  LAWS    OF    TRADE.  123 

Our  forefathers  were  the  first  occupants  (save  bar- 
barians, who  had  never  instituted  the  right  of  property 
in  land,)  of  an  extensive  and  fertile  domain.  They  con- 
sequently possessed  a  relatively  larger  quantity  of  land 
or  natural  utility,  than  they  did  of  artificial  utility, 
muscles  and  nerves;  therefore,  in  every  concurrent 
group  of  their  productive  agents,  the  service  of  nature 
greatly  exceeded  that  of  either  of  the  other  three.  This 
necessarily  gave  them  a  high  rate  of  profit,  because  the 
gross  value  produced,  was  large  in  comparison  with  the 
quantity  of  skill,  labor,  capital,  and  market  value  of 
land  employed.  These  large  profits,  being  equally 
divided  between  the  proprietors  of  industry  on  one  side, 
and  those  of  capital  and  land  on  the  other,  of  course 
enabled  the  former  to  partake  more  freely  than  they 
could  otherwise  have  done,  of  the  comforts  of  life,  arid 
of  the  advantages  of  education ;  and  it  was  thus  that  th<3 
condition  of  the  masses  in  this  country  was  fixed  at  an 
elevated  standard,  and  that  our  people  were  endowed 
with  a  superior  degree  of  vigor,  skill  arid  enterprise. 

Let  us  next  glance  at  the  present  condition  of  our 
country  as  it  respects  profits.  If  we  look  abroad  over 
the  whole  republic,  we  see  different  rates  of  profit  accruing 
in  different  sections  and  localities,  ranging  from  6  per 
cent,  per  annum,  up  to  10  or  12  per  cent.  Why  is  this  ? 
What  causes  the  diversity?  Upon  a  closer  examination^ 
we  find  that  the  rate  varies  with  the  density  of  popu- 
lation, and  the  fertility  of  land.  Where  population  is^/ 
most  dense,  as  compared  with  the  quantity  and  fertility 
of  land,  profits  are  lowest ;  where  most  sparse,  they 
are  highest ;  and  so  of  the  intermediate  degrees. 

Then,  again,  if  we  contemplate  the  probable  future  of 
our  country,  we  find  that  it  is  increasing  in  population 
as  rapidly  as  the  laws  of  human  nature,  aided  by  an 


124  LAWS    OF   TRADE.  [PART.   II. 

active  immigration  will  permit ;  that  capital  keeps  pace 
with  population,  and  that  every  advancing  step  they 
take,  lowers  the  rate  of  profit  by  enhancing  the  price  of 
land  ;  that  both  are  doubling  in  quantity  every  twenty- 
three  years,  and  quadrupling  in  forty-six  years ;  that' 
they  are  thus  progressing  with  a  steadiness  and  certainty 
which  nothing  short  of  unnatural  causes  can  check,  much 
less  stay,  and  therefore,  must  ultimately  reach  that 
point  of  density  in  which  the  relative  scarcity  and  dear- 
uess  of  land  will  reduce  profits,  not  merely  to  the  stand- 
ard rate,  but  to  their  lowest  vibrating  limits.  When 
we  regard  the  slowness  of  their  progress,  and  the 
immense  quantity  of  our  unoccupied  land,  the  period  re-  > 
ferred  to  appears  remote  in  the  future ;  but  sooner  or  later 
it  must  arrive,  and  it  is  in  fact  much  nearer  than  wre  are 
apt  to  consider.  It  arrived  in  China  long  since,  and  it 
would  have  arrived  in  Western  Europe  before  now,  but 
for  the  discovery  of  America.  That  important  event, 
while,  on  the  one  hand,  it  provided  an  outlet  for  the 
surplus  population  of  Europe,  it  gave  her,  on  the  other, 
a  new  market  in  which  to  exchange  the  fabrications  of 
art  for  products  of  the  soil  :  which  causes  have  delayed 
the  time  when  her  industry  and  capital  will  so  far  equal 
her  land  as  to  bring  the  whole  of  the  latter  under  culti- 
vation. But  in  the  face  of  those  counteracting  causes, 
that  period  has  approached  sufficiently  near  in  Europe, 
to  reduce  the  rate  of  profit  there  to  about  3  per  cent,  per 
annum ;  and  its  fore-cast  shadow  has  already  crossed 
our  own  borders,  as  may  be  seen  in  the  fact,  that  profits 
are  reduced,  in  the  older  and  more  densely  peopled 
sections  of  our  country,  to  about  half  the  rate  that  attends 
production  in  the  west,  where  land  is  still  plenty  and 
cheap. 

The  considerations  now  advanced,  I  deem  sufficient  to 


CHAP.    III.]  LAWS    OF    TRADE.  125 

show  :  That,  in  the  general  field  of  production,  profits 
have  a  gravitating  point,  or  general  standard  rate,  above 
and  below  which  they  oscillate :  that  an  excess  of  land, 
ill  any  given  locality  or  nation,  causes  them  to  exceed 
this  rate,  an  excess  of  population  and  capital,  to  fall 
short  of  it ;  but  that  either  of  these  conditions  gives 
action  to  laws  which  tend  to  bring  them  to  that  standard 
ultimately  :  that  the  limitations  to  which  the  increase  of 
population  is  subject,  render  these  laws  so  tardy  in  their 
enforcement,  that  it  often  requires  the  elapse  of  centuries 
to  correct  a  single  vibration  in  the  rate  of  profit,  in  con- 
sequence of  which,  the  actual  rate  is  different  in  the 
different  nations  ;  in  some  it  coincides  with  the  standard 
rate,  while  in  others  it  is  either  higher  or  lower  ;  but 
wherever  a  difference  exists,  the  actual  rate  is  slowly 
and  surely  tending  towards  the  common  average. 

These,  however,  are  not  the  only  oscillatory  move- 
ments to  which  the  rate  of  profit  is  subject.  There  are 
others  in  which  the  movements  are  far  more  rapid,  and 
the  reactions  more  prompt.  Those  we  have  noticed, 
may  be  termed  the  vibrations  incident  to  the  different 
national  sections  of  the  general  standard  of  profit — vibra- 
tions which  move  so  slowly,  that,  in  any  given  nation,  a 
single  passage  from  the  highest  to  the  lowest  limits  of 
profit,  usually  occupies  the  whole  period  of  that  nation's 
existence,  and,  in  fact,  governs  its  rise,  progress  and 
decay.  The  oscillations  in  the  rate  of  profit  that  we 
have  next  to  consider,  are  those  to  which  these  different 
national  standards  are  themselves  subject,  at  every 
stage  of  their  more  tardy  vibrations  about  the  general 
standard  ;  for  it  is  to  be  observed  that  the  current  rate 
of  profit,  instead  of  conforming  strictly  to  the  temporary 
standard  which  the  causes  just  noticed  award  to  a  given 
nation  at  a  given  time,  merely  oscillates  about  that 


126  LAWS    OF   TRADE.  [PART.    II. 

Standard.  In  other  words,  the  general  standard  of  profit 
consists  of  national  sections,  all  of  which  vibrate  about 
a  common  centre  of  gravity,  and  each  of  which  (at  every 
point  in  the  primary  circuit)  performs  secondary  oscilla- 
tions about  its  own  centre  of  gravity.  These  compara- 
tively frequent  and  temporary  fluctuations  in  the  rate  of 
profit,  are  well  known  to  occur,  but  we  have  yet  to  ascer- 
tain the  causes  which  produce  and  correct  them.  To 
that  investigation  we  will  now  proceed. 

It  was  maintained  by  Malthus,  in  his  celebrated  Essay 
on   Population,  that  mankind  tended  to  increase  more 
rapidly  than  the  means  of  support ;  in  other  wTords,  that 
population  is  endowed  with  a  greater  capacity  of  increase 
than  capital.     There  may  be  special  cases  in  respect  ofj 
which  this  proportion  is  true,  but  it  appears  to  me  clearly 
untenable   as   a   general   proposition.      We   have   seen 
that  if  the  fecundity  of  the  human  race  were  entirely 
unrestrained,  and  the  rate  of  mortality  reduced  to  its 
lowest  known  limits,  the  excess  of  births  over  deaths 
would  not  even  then  exceed  83  per  cent,  per  annum  ;  and 
we  know  that  the  restraints  imposed  on  procreation  by 
the  unequal  distribution  of  wealth,  and  by  various  other 
Causes  and  motives,  limit  the  actual  excess,  in  the  most 
prosperous  communities,  to  about  3  per  cent,  per  annum. 
This  fact  is  clearly  proved  by  our  own  statistics  of  popula- 
tion ;  for  it  is  safe  to  say  that  the  history  of  the  world  does 
not  present  another  instance  in  which  the  assemblage  of 
conditions   were  equally  favorable  for  the  increase   of 
population ;   and  yet  our  rate  of  increase,  exclusive  of 
Immigration,  has  not  exceeded  those  limits.     These  facts 
prove  that  3  per  cent,  per  annum,  or  thereabout,  is  the 
utmost  capacity  of  increase  inherent  in  population,  how- 
ever abundant  the  means  of  support.  As  relates  to  capital's 
capacity  of  increase,  it  may  be  observed  that  the  present 


CHAP.    III.]  LAWS    OF   TRADE.  127 

general  standard  of  profit  affords  the  means  of  increasing    . 
the  capital  of  the  world,  at  the  rate  of  6^  per  cent,  per 
annum,  because  it  may  reproductively  consume  the  whole 
of  its  own  share  of  profit,  together  with  one  third  of  the 
share  awarded  to  land.     For  instance,  a  profit  of  5  per 
cent,  to  each  of  the  four  prime  agents,  gives  an  aggregate 
profit  of  20  per  cent.,  one-third  of  which  might  be  repro- 
ductively consumed  in  the  augmentation  of  skill,  of  labor,, 
and  of  capital,  respectively,  but  for  the  fact  that  other 
causes  than  deficient  means  of  support,  limit  the  increase 
of  population  to  3  per  cent,  per  annum.     And  there  can 
be  no  doubt  that  capital  would  actually  increase  at  some, 
thing  like  that  rate,  were  it  not  for  the  inability  of  labor 
and  skill  to  keep  pace  with  it ;  for  it  must  be  borne  in 
mind,  that  the  laws  of  trade  will  not  permit  either  one 
of  the  prime  agents  to  augment  more  rapidly  than   its 
co-laborers  in  the  field  of  production.     These  considera-1 
tions  show  that,  as  it  respects  the  entire  domain  of  pro- 1 
duction,  the  converse  of  the  Malthusean  doctrine  is  the  I 
true  one.     As  before  remarked,  however,  there  may  be 
some  few  instances  in  which  a  redundancy  of  population 
and  limited   external  commerce,    combined  with  other 
adverse  causes,  have  reduced  the  rate  of  profit  below  the 
capacity  of  increase   inherent  in  mankind — China  and 
Japan  are  probably  cases  in  point.    But  while  unoccupied 
land  remains  in  any  part  of  the  world,  and  international 
commerce  continues,  we  may  safely  declare  the  general    / 
principle    to   be,  tfcat   capital  tends   to   increase   more 
rapidly  than  population.     And  it  is  this  very  tendency 
that  produces  the  secondary  oscillations  in  the  rate  of 
profit,  as  I  will  proceed  to  show  in  connexion  with  the 
causes  by  which  that  tendency  is  counteracted. 

In  tracing  out  the  consequences  of  a  disturbance  of 
the  equation  of  skill,  labor,  capital  and  land,  we  dis- 


128  LAWS    OF    TRADE.  [PART.  II. 

covered  that  an  excess  of  the  latter  not  only  elevated  the 
rate  of  profit,  and  tended  thereby  to  increase  population 
and  capital,  but  that  it  also  rendered  industry  more 
vigorous  and  skilful,  and  machinery  more  abundant  and 
perfect ;  -whence  it  might  be  inferred  that,  so  long  as  the 
excess  remained,  the  rate  of  profit  would  continue  to 
ascend  higher  and  still  higher,  without  any  assignable 
limits.  Such  is  undoubtedly  the  tendency,  and  such 
would  be  the  fact,  were  it  not  for  the  intervention  of 
other  laws  beside  those  hitherto  noticed.  We  shall  find 
however,  upon  a  closer  examination,  that  whenever 
capital  gets  a  certain  degree  in  advance  of  population, 
and  the  rate  of  profit  an  equal  degree  above  the  tempo- 
rary standard  which  the  relative  quantity  and  fertility  of 
land  awards,  they  meet  with  counteracting  tendencies 
which  not  only  arrest  their  farther  progress,  but  force 
them  back  to  their  natural  positions. 

The  higher  the  rate  of  profit,  the  larger  the  portion 
thereof  unproductively  consumed,  because  the  rate  of  in- 
crease in  population  vibrates  within  narrower  limits  than 
does  the  rate  of  profit ;  the  former  ranges,  say  from  2  to 
3  per  cent,  per  annum,  the  latter  from  2|-  to  T|,  the 
mean  of  each  being,  respectively,  2|  and  5.  When 
both  are  at  their  mean,  the  share  of  profit  unproductively 
consumed,  is  five- eighths  of  the  whole,  as  I  have  shown 
in  another  place  ;  when  both  are  at  their  highest  limits, 
that  share  is  more  than  two-thirds  of  the  larger  aggre- 
gate ;  and  when  both  are  at  their  lowest  limits,  it  is  but 
two-fifths  of  the  smaller  aggregate.  It  is  to  be'  noticed 
also,  that  the  cost  or  value  of  the  productive  agents  them- 
selves, is  greater  when  the  rate  of  profit  is  high,  than 
when  it  is  low,  because  the  agents  of  industry  are  better 
provided  for  ;  they  consume  more  of  value  in  their  pro- 
duction, preservation  and  repair  ;  and  the  cost  of  capital 


CHAP.    III.]  LAWS  OP   TRADE.  129 

and  market  value  of  land,  as  already  shown,  are  gov- 
erned by  and  conform  to  the  aggregate  cost  or  value  of 
industry.  In  view  of  these  facts,  we  may  readily  per- 
ceive that,  as  the  rate  of  profit  ascends,  the  amount  of 
unproductive  consumptions  increase  in  a  still  greater 
ratio. 

To  illustrate  this  point  more  clearly,  let  us  revert  for 
a  moment  to  our  former  hypothesis,  namely :  that,  in 
order  to  produce  5  per  cent,  per  annum  of  profits,  it  is 
requisite  the  average  value  of  a  concurrent  group  of  the 
productive  forces  should  be  equal  to  $2,000*  This  gives 
an  aggregate  profit  to  each  group  of  $100,  five-eighths, 
or  $62TVo  °f  which,  must  be  unproductively  consumed 
in  ministering  to  non-essential  desires.  Now,  it  is  fair 
to  presume,  that  where  the  rate  of  profit  is  raised  to  7£ 
per  cent.,  the  cost  of  producing  industry  will  be  enhanced 
in  an  equal  degree,  because  the  higher  the  rewards 
of  industry  the  more  elevated  the  standard  of  what  are 
regarded  as  the  necessaries  of  life,  as  may  be  seen  by 
reference  to  any  two  countries  in  which  the  existing 
rates  of  profit  differ.  According  to  this  estimate,  with 
the  rate  of  profit  at  7 1  per  cent.,  and  the  rate  of  increase 
of  population  and^capital  at  3  per  cent. — as,  for  instance, 
in  the  United  States  at  the  present  ime — the  average 
value  of  a  concurrent  group  is  equal  to  $3,000,  the 
gross  profit  $225,  and  the  proportion  thereof  unproduc- 
tively consumed,  more  than  $150.  A  similar  estimate 
for  the  lowest  rate  of  profit  would  give,  as  the  value  of  the 
group,  $1,000,  the  gross  profit,  $25,  and  the  share 
unproductively  consumed,  $14.  And  a  similar  estimate 
for  a  rate  of  profit  at  10  per  cent.,  would  give  more 
than  $300  as  the  average  amount  of  unproductive  con- 
sumptions awarded  to  an  adult  citizen. 

12 


130  LAWS    OF    TRADE.  [PART    II 

These  approximate  estimates  are  presented  for  the 
purpose  of  showing  the  rapidly  accelerated  force  with 
which  non-essential  desires  are  liberated  as  the  rate  of 
profit  ascends.  It  must  be  admitted  that  many  of  these 
desires  may  be  temperately  indulged  without  impairing 
the  efficiency  of  industry ;  but  it  is  well  known  that 
their  too  free  indulgence  enervates  both  body  and  mind. 
This  is  true  of  the  least  hurtful  kind  of  excesses,  while 
tliere  are  others,  such  as  intemperance  in  drink,  so  per- 
nicious, that  they  completely  paralize,  and  sometimes 
destroy  the  industrial  powers.  It  is  therefore  evident, 
that  very  high  profits  tend  to  diminish  the  productive- 
ness of  industry.  Nor  is  this  their  only  self-destroying 
tendency.  By  liberating  desires  that  are  chained 
under  a  lower  rate  of  profit,  they  establish  luxurious 
habits,  which  not  unfrequently  become  the  masters  of 
those  imbibing  them.  The  desires  are  first  set  free  with 
the  view  of  consuming  the  surplus  profits — for  it  must 
be  remembered  that  they  cannot  be  reproductively  con- 
sumed ;  they  are  next  invited  to  the  fruition  of  their 
objects  ;  they  accept  the  invitation  with  the  avidity  of 
long  restrained  appetite ;  the  surplus  profits  speedily 
disappear,  and,  during  the  process,  the  habit  of  gratify- 
ing the  desires  obtains  such  a  mastery  over  the  man, 
that  whatever  amount  of  capital  he  happens  to  possess, 
usually  disappears  through  the  same  channel.  Thus, 
undue  profits  lead  not  only  to  the  consumption  of  sur- 
plus products,  but  to  the  consumption  of  one  of  the 
agencies  by  which  they  are  produced.  There  is  yet 
another  element  of  self-destruction  inherent  in  exorbi- 
tant profits.  They  increase  the  rewards  of  industry, 
and  thereby  remove  the  poorer  classes  farther  from  the 
borders  of  starvation.  This,  by  quieting  the  fear  of 
want,  permits  idleness  and  luxury,  those  great  antago- 


CHAP.    III.]  LAWS  OF    TRADE.  131 

nists  of  wealth,  to  usurp  the  place  of  diligence  and  fru- 
gality ;  by  which  means,  production  is  paralized,  and 
profits  suppressed. 

Such  are  the  influences  by  which  excessive  profits  and 
redundant  capital  are  made  to  sow  the  seeds  of  their 
own  destruction.  But  if  additional  evidence  of  this 
fact  be  required,  it  may  be  found  in  the  conduct  of  indi- 
viduals. An  individual  reared  in  penury  and  in  the  fear 
of  want,  usually  concentrates  his  whole  energies  of  body 
and  mind  on  the  acquisition  of  wealth  ;  he  neither  stops 
to  enjoy  his  acquisitions,  nor  turns  aside  to  aid  in  the 
advancement  of  others,  but  pushes  on  through  life  under 
the  guidance  of  that  paramount  desire  ;  and,  if  he  hap- 
pens to  be  gifted  with  superior  skill,  he  finishes  hia 
course  at  the  opposite  extreme,  the  pinnacle  of  wealth. 
One  that  springs  from  the  middle  ranks  of  wealth, 
being  equally  removed  from  the  fear  of  want  and  from 
luxury,  is  apt  to  remain  there,  unless  driven  to  one  or 
other  extreme  by  accident  or  peculiar  endowments; 
while  on  the  other  hand,  one  that  is  reared  in  the  lap  of 
luxury,  or  in  the  expectancy  of  a  large  inheritance,  gen- 
erally proves  to  be  such  an  idler  and  spendthrift,  that 
he  ends  his  life  in  poverty.  It  is  therefore  evident,  that 
extreme  individual  poverty  tends  to  engender  habits  of 
diligence  and  frugality,  which  ultimately  lead  to  wealth, 
and  that  extreme  individual  affluence  sows  the  seeds  of 
its  own  destruction ;  and  what  is  true  of  individuals  as 
a  general  rule,  must  be  universally  true  in  respect  of 
masses  or  communities,  or  of  society  at  large. 

After  this  full  presentation  of  facts  bearing  on  the 
point,  the  true  theory  of  secondary  oscillations  in  the 
rate  of  profit  and  in  the  degree  of  wealth,  may  be  thus 
briefly  stated : 


132  LAWS    OF   TRADE.  [PART   II. 


Capital  has  greater  capacity  of  increase  than 

—  the  larger  the  relative  quantity  of  land?  as  com- 
pared with  the  other  prime  agents,.  the  wider  the  differ- 
ence. When  the  prime  agents  equal  each  other  in  quan- 
tityy  the  rate  is  about  5  per  cent,  per  annum,  the  increase 
of  population  about  2|  per  cent,  j  when  land  is  in  exeess,, 
the  rate  of  the  one  is  about  7|  per  cent.,  the  increase 
of  the  other  about  3  per  cent.  ;  when  industry  is  in 
excess,  the  rate  of  profit  is  reduced  to  about  2|  per 
cent.,  and  the  increase  of  population  to  2  per  cent.  ;  andr 
in  eaclk  case,  the  capacity  of  increase  inherent  in  capital 
is  equal  to  the  rate  of  profit  plus  one  third  of  that  rate* 
Therefore,  the  economic  progress  of  a  community,  in 
which  the  density  of  population,  and  all  the  other  more 
permanent  conditions  that  effect  the  profits  of  produc- 
tion, are  of  the  medium  degree,  must  be  marked  by  var- 
iations something  like  these  ;  At  first,  capital  increases- 
at  the  rate  of  6|  per  cent,  per  annum,  population  at  the- 
rate  of  2|  per  cent.  This  excess  of  capital  augments 
the  rewards  of  industry,  and  thereby  adds  to  its  effi- 
ciency ;  the  increased  efficiency  of  industry,  and  the 
augmentation  of  capital,  enhance  the  rate  of  profit,  s&y 
to  7  1  per  cent.,  which,  in  its  turi},  enables  capital  to  in- 
crease at  the  rate  of  10  per  cent,  per  ammm,  and  popu- 
lation at  the  rate  of  3  per  cent.,  which  is  the  highest  ca- 
pacity of  the  latter  ;  then  the  enlarged  capital  again  en- 
hances the  rate  of  profit,  the  enhanced  rate  of  profit 
again  accelerates  the  increase  of  capital,  and  so  on.  Butr 
while  capital  and  profit  thus  mutually  contribute  to  each 
other's  enlargement,  it  must  be  remembered  that  every 
step  they  take  in  advance  of  population,  weakens  the 
sources  of  production  and  increases  the  consumption  of 
wealth,  by  relaxing  habits  of  diligence  and  frugality  ,  and 
by  strengthening  those  of  idleness  and  luxury.  As  soon  as 


CHAP.    III.]  LAWS    OF    TRADE.  133 

the  last  named  habits  obtain  the  supremacy,  capital  be- 
gins to  dimmish,  and  the  rate  of  profit  to  descend,  and 
neither  will  stop  until  capital  is  thrown  as  far  in  arrear 
of  population,  and  the  rate  of  profit  as  far  below  the  stand- 
ard, as  were  their  prior  advances  beyond  them.  Then 
principles  of  an  opposite  tendency  are  brought  to  bear, 
and  a  reaction  takes  place,then  another,  and  so  on  continu- 
ously. Similar  variations  occur  where  land  is  in  excess 
and  the  temporary  standard  of  profit  at  its  highest  lim- 
its ;  the  only  difference  in  the  two  cases  being  a  differ- 
ence in  time.  Capital  gets  in  advance  of  population 
most  readily  and  promptly  when  profits  are  large ;  in 
other  words,  the  higher  the  rate  of  profit,  the  shorter  the 
period  required  for  capital  to  reach  that  degree  of  excess 
which  produces  a  reaction ;  and  since  the  rate  of  profit 
is  highest  where  land  is  most  abundant  and  cheap,  it  is 
evident  that  an  excess  of  land  tends  to  increase  the  fre- 
quency of  the  oscillations  referred  to.  An  excess  of 
population,  of  course,  produces  effects  the  contrary  of 
these  :  it  renders  the  movement  more  tardy,  and  the 
reactions  less  frequent. 

Such  I  conceive  to  be  the  correct  interpretation  of 
this  section  of  nature's  code — such  the  principles  which 
limit  the  degree  of  wealth,  and  which  cause  both  that 
and  the  current  rate  of  profit  to  perform  what  I  have 
termed  secondary  oscillations  about  the  temporary  stand- 
ards which  the  relative  quantity  of  land  happens  to 
establish  for  each  at  a  given  time  and  place.  But  do 
these  variations  actually  take  place  ?  It  occurs  to  me 
that  there  may  be  those  who  doubt  the  existence  of  the 
phenomena  which  I  have  taken  so  much  paius  to  explain. 
If  so,  I  would  refer  them  to  their  own  experience,  and 
to  the  experience  of  all  others,  as  evidenced  in  the  uni- 
versal phrases,  "  the  times  are  good,"  "  the  times  are 
12* 


LAWS    OF  TRADE,  [PART    II. 

bad  ;"  and  especially  to  the  fluctuations  that  take  place 
in  the  rate  of  interest.  If  these  evidences  should  not 
suffice  to  remove  their  doubts,  they  may  find  a  still  more 
convincing  proof  of  the  fact  asserted,  in  the  periodical 
occurrence  of  commercial  revulsions.  This  phenomenonr 
while  it  cannot  be  satisfactorily  accounted  for  in  any 
other  way,  is  an  obvious  and  unavoidable  consequence  of 
reactions  in  the  degree  of  wealth  and  profit, — that  is  to 
say,  the  collapse  of  commerce  and  credit  is  a  necessary 
sequence  of  a  diminution  in  the  general  wealth  arid  pros- 
perity. I  am  aware  that  the  general  belief  is,  that  the 
collapse  is  the  cause,  not  the  consequence  of  the  diminu- 
tion ;  but  I  am  entirely  satisfied  that  an  attentive  obser- 
vation of  the  facts  would  prove  that  the  latter  invariably 
takes  precedence  in  the  order  of  time.  These  oscillations 
in  wealth  and  profits  are  in  a  measure  hid  from  our  view7 
by  constant  fluctuations  in  the  vafcie  of  money  and  in 
the  degree  of  credit,  and  their  regularity  is  broken  by 
many  accidental  circumstances  ;  hence  we  cannot  ascer- 
tain their  periods  with  precision.  But  from  the  indica- 
tions afforded  by  commercial  revulsions,  we  are  authori- 
zed to  conclude  that,  in  this  country,  where  the  rate  of 
profit  is  high,  they  touch  their  highest  limits  as  often  as 
once  in  ten  or  twelve  years.  Where  the  national  stand- 
ard of  profit  is  lower,  the  intervals  are  proportionally 
longer. 

Having  pointed  out  the  different  kinds  of  fluctuations 
which  occur  in  the  rate  of  profit,  and  in  the  degree  of 
wealth,  and  having  ascertained  the  laws  to  which  those 
fluctuations  are  subordinate,  it  now  remains  to  inquire  : 
What  are  the  great  overruling  principles  which  so  gov- 
ern the  production,  distribution  and  consumption  of 
wealth,  as  to  establish,  for  the  world  at  large,  a  natural 
standard  of  profit  and  a  natural  degree  of  wealth  1  In 


CHAP.    III.J  LAWS    OF  TRADE.  135 

other  and  more  familiar  language,  why  are  not  the  aver- 
age profits  of  production,  either  higher  or  lower  than 
they  are,  and  why  is  not  the  wealth  of  the  civilized 
world  either  greater  or  less  than  it  is  ?  Why  is  the 
mean  rate  of  profit  about  5  per  cent,  per  annum,  instead 
of  one  per  cent.,  or  ten  per  cent.  7  And  why  is  the 
wealth  of  the  civilized  world,  when  expressed  in  dollars, 
equal  to  about  one  thousand  times  the  number  of  its 
adult  inhabitants,  instead  of  one  tenth  or  ten  times  that 
amount?  To  these  queries,  we  may  return  the  general 
answer,  that  the  existing  degrees  of  wealth  and  pros- 
perty  necessarily  result  from  the  joint  action  of  the 
laws  of  human  nature,  the  plan  of  social  wealth,  and 
the  natural  laws  of  trade  hitherto  unfolded  :  they  are 
the  ultimate  economic  effects  of  that  assemblage  of 
causes. 

Profit  is  closely  related  to  natural  wealth.  In  fact,  it 
may  be  said  to  originate  thence,  since,  as  already  shown, 
the  productive  service  of  land,  and  other  contributions 
of  nature,  are  the  principal  elements  in  its  composition. 
Where  these  free  contributions  are  relatively  greatest, — 
where  the  quantity  and  fertility  of  land,  and  the  natural 
facilities  of  intercourse  and  transport,  preponderate  most 
over  population  and  capital,  the  rate  of  profit  is  high- 
est ;  and  where  these  conditions  are  least  favorable,  the 
rate  is  lowest.  From  these  premises,  considered  in  con- 
nection with  the  fact,  that  the  earth  is  not  yet  fully 
peopled,  it  may  be  inferred  that  the  existing  general 
standard  of  profit  (5  per  cent.)  results  from  a  sufficiency 
of  land,  of  medium  fertility,  to  give  full  and  unrestrain- 
ed employment  to  the  industry  and  capital  placed  upon 
it.  These  we  may  regard  as  the  average  conditions  of 
production — the  mean,  in  point  of  favorableness,  of  the 
general  field.  To  that  mean,  the  laws  of  trade  are 


136  LAWS    OF    TRADE.  [PART    II. 

slowly  but  surely  bringing   the  conditions  everywhere, 
by    transferring   surplus  population   to    surplus    lands, 
as  well  as  by  various  other  means  of  relief  where  the 
conditions   arc  adverse,  and  of  depression  where  they 
are  unusually  favorable.     Consequently,  5  per  cent,  per 
annum  is  the  central  point  or  natural   standard  towards 
which   the  different  temporary  standards  of  profit  are 
tending.     Other  considerations,  already  adduced,  point 
to  the  same  conclusion.     We  have  seen,  for  instance, 
that   the  rate  of  profit  cannot  be  permanently  lower 
than  2  £  per  cent,  per  annum,  where  the  conditions   are 
most  adverse,  nor  higher  than  Tj  per  cent,   where  they 
are  most  favorable ;  for  the  reason  that  a  greater  de- 
pression superinduces  famine  and  frugality,  or  a  larger  ^ 
consumption  of  industry  than  of  capital,  and  a  greater 
elevation,  idleness  and  luxury,   or   a  disproportionate 
consumption  of  capital;  either   of  which  consequences 
produces  a  reaction  in  the  rate  of  profit.      Therefore, 
2£  per  cent.,  and  7^  per  cent.,  indicate  the  boundaries 
beyond  which  the  more  permanent  rates  of  profit  cannot 
pass — within  these  limits,  the  primary  vibrations  of  profit 
are  necessarily  confined  ;  and  if  these  are  the  vibrating 
limits,  it  is  evident  that  5  per  cent,   must  be  the  gravi- 
tating centre,  since  it  is  the  mean  of  the  two  extremes. 
This  general  standard  cannot  be  sensibly  elevated  while 
human  nature  remains  what  it  is,  nor  permanently  de- 
pressed so  long  as  unoccupied  lands  remain  in  any  part 
of  the  world.     As  respects  the  first  named  condition,  we 
have  no  reason  for  anticipating  a  change  ;  but  it  is  pro- 
bable  that   the  period  will  arrive,    sooner  or  later,  in 
which  the  industry  and  capital  of  the  world  will  more 
than  suffice  to  cultivate  its  entire  surface ;  and  if  so,  it 
is  manifest  that  the  present  standard  of  profit  must  then 
b©  lowered. 


CHAP.    III.]  LAWS  OF   TRADE.  137 

But  what  are  the  principles  which  have  established 
arid  now  maintain  the  average  degree  of  wealth  at  about 
$1 ,000  per  adult  inhabitant.  Evidently  thej  are  similar 
in  kind  to  those  which  preside  over  the  general  standard  of 
profit,  since,  as  already  shown,  the  degree  of  wealth  and 
rate  of  profit  always  vibrate  in  unison.  This  fact  proves 
that  the  former,  like  the  latter,  has  a  gravitating  centre  or 
najtural  standard, about  which  the  current  degree  oscillates; 
and  the  statistics  of  wealth,  although  too  meagre  and  faulty 
to  admit  of  any  thing  like  an  accurate  estimate,  never- 
theless prove,  that  something  like  the  degree  of  wealth 
just  named  constitutes  that  standard.  These,  however, 
are  merely  the  preliminary  points  :  they  authorize  the 
main  question,  but  do  not  answer  it.  That  question  is, 
why  have  the  laws  of  trade  established  the  general  stand- 
ard of  wealth  at  the  degree  named,  rather  than  at  any 
other  degree  ?  It  will  perhaps  be  a  sufficient  answer  to 
sa}T,  that  some  specific  degree  of  wealth  is  requisite  to 
the  equal  development  of  those  two  antagonist  forces, 
production  and  consumption ;  and  that  the  existing 
amount  of  wealth  coincides  with  that  degree ;  which 
positions  are  proved  by  the  facts  already  noticed,  that  a 
larger  degree  tends  to  its  own  diminution  by  superindu- 
cing idleness  and  luxury,  and  a  smaller  degree  to  its 
own  enlargement,  by  necessitating  diligence  and  frugal- 
ity. It  is  to  be  noticed,  however,  that  the  degree  of 
wealth  requisite  to  the  equalization  of  production  and 
consumption,  varies  with  the  conditions  under  which  it  is 
produced,  distributed  and  consumed ;  being  greatest 
where  land  is  most  abundant  and  fertile  and  wealth  most 
equally  distributed,  and  least  where  the  conditions  are 
the  opposite  of  these ;  from  which  it  is  evident  that  the 
standard  degree  of  wealth,  like  the  standard  rate  of 
profit,  is  primarily  dependent  on  the  degree  of  nature's 


138  LAWS    OF    TRADE,  [PART    II. 

bounty.  We  have  seen  that  an  average  degree  of 
natural  wealth  awards  to  production  a  profit  of  5  per  cent, 
per  annum.  This  rate  of  profit,  while  it  requires,  as 
one  of  the  conditions  of  its  production,  the  concurrence 
of  capital  in  the  ratio  of  $500  to  one  industrial  agent, 
at  the  same  time,  awards  to  industry  the  proper  degree 
of  revenue  for  securing  that  ratio ;  because  it  enables 
the  industrial  classes  to  place  the  standard  of  the  neces- 
saries of  life  at  that  degree  of  elevation  which  renders 
the  mean  cost  of  producing  industrial  agents  equal  to 
$,1000  each  ;  and  we  have  seen  that  the  cost  of  produ- 
cing industry  governs  the  amount  of  capital,  and  that 
it  awards  to  the  latter  an  aggregate  value  equal  to  half 
that  of  its  own,  or,  if  we  include  the  market  value  of 
land,  exactly  equal  to  its  own  value. — From  these  and 
other  considerations  heretofore  advanced,  I  derive  the 
following  general  conclusions  : 

The  relative  quantity  of  natural  wealth,  as  compared 
with  population  and  artificial  wealth,  governs  the  stand- 
ard rate  of  profit ;  this  standard  governs  the  cost  of 
producing  and  maintaining  industry  ;  the  cost  of  pro- 
ducing industry,  governs  the  quantity  of  capital — estab- 
lishing its  aggregate  cost  or  value  at  a  point  equal  to  one 
half  of  that  of  the  existing  industry ;  the  quantity  of 
capital  governs  the  market  value  of  land,  keeping  the 
magnitude  thereof  on  an  exact  level  with  its  own.  These 
principles,  operating  in  conjunction  with  the  laws  of 
human  nature,  and  in  conformity  to  the  plan  of  social 
wealth,  have  established  as  general  standards,  5  per 
cent,  per  annum,  as  the  mean  rate  of  profit  on  produc- 
tion, and  about  $500  per  adult  head,  as  the  mean  quan- 
tity of  productive  capital,  and,  including  the  market 
.  value  of  land,  a  mean  of  $1,000  per  adult  head,  as  the 
natural  degree  of  wealth.  Where  land  is  either  scarce 


CHAP.    III.]  LAWS  OF    TRADE.  139 

or  possessed  of  a  low  degree  of  fertility,  or  govern- 
ment interposes  unnecessary  hindrances,  both  these 
standards  are  lower  than  the  degrees  named  ;  where  land 
is  abundant  and  fertile,  and  the  economic  polity  enlight- 
ened, both  are  higher ;  but  since  the  desire  of  gain  is 
constantly  drawing  population  from  localities  and  coun- 
tries where  profits  are  lowest  and  wealth  least,  to  those 
where  both  are  greatest,  (the  more  rapid  increase  of 
native  population,  in  the  latter,  also  tending  to  the 
same  result,)  the  general  equation  will  be  sooner  or 
later  brought  about.  Since,  moreover,  there  now  is, 
and  must  be  for  centuries  to  come,  a  surplusage  of  land, 
beyond  the  requirements  of  industry  and  capital,  we 
may  regard  the  rate  of  profit  and  the  degree  of  wealth 
just  named,  as  the  permanent  general  standards  about 
which  each  must  continue  to  vibrate. 

These  are  conclusions  in  which  there  are  probably 
very  few  prepared  to  concur,  similar  views  not  having 
been  heretofore  advanced,  so  far  as  I  know,  in  any  quarter. 
My  own  views  were  somewhat  different,  it  must  be  con- 
fessed, when  I  commenced  the  investigation  of  this 
subject ;  but  a  faithful  adherence  to  the  principles 
evolved,  and  a  firm  determination  to  follow  them  out  to 
their  legitimate  results,  having  brought  me  to  these  con- 
clusions, and  impressed  on  my  mind  a  conviction  of  their 
truth,  1  unhesitatingly  adopt  them  ;  for  I  have  no  desire 
to  shun  the  presence  of  truth,  however  unexpected  or 
unwelcome  may  be  the  aspect  in  which  it  presents  itself. 
I  had  hoped  that  a  thorough  knowledge  of  the  origin, 
nature  and  attributes  of  wealth,  and  of  the  principles 
which  control  its  production,  distribution  and  consump- 
tion, would  enable  us  to  devise  a  plan  by  which  poverty 
and  its  attendant  miseries  might  be  either  wholly  ban- 
ished from  the  world,  or  at  the  least,  g.eatly  lessened. 


140  LAWS    OF    TRADE,  [PART    II. 

The  conclusions  at  which  I  have  arrived  would  seem,  at 
the  first  blush,  to  destroy  that  hope,  seeing  that  the 
natural  laws  of  trade,  and  especially  the  laws  of  human 
nature,  stand  as  immovable  obstacles  to  its  accomplish- 
ment. I  trust,  however,  that  we  shall  find,  when  we 
come  to  consider  the  economic  polity  of  government, 
that  much  may  be  done  by  proper  legislation  in  mitiga- 
tion of  these  evils.  It  is  much  to  know  the  true  char- 
acter of  the  difficulties  with  which  we  have  to  contend ; 
without  this  knowledge,  success  can  result  from  our  best 
efforts  only  by  accident.  But  when  we  know  the  causes 
or  principles  concerned  in  the  production  of  phenomena, 
we  can,  as  an  eminent  philosopher  has  suggested,  go  to 
work  understandingly  with  the  view  of  mitigating  that 
which  is  evil  in  their  tendencies,  and  of  promoting  that 
which  is  good, — refraining  altogether  where  science 
tells  us  that  our  best  efforts  would  be  either  futile  or 
injurious. 

I  have  now  completed  the  imperfect  survey  which  I 
proposed  to  take  of  the  scientific  aspect  of  Political 
Economy.  I  have  traced  out  the  origin,  nature  and 
attributes  of  wealth,  and  have  endeavored,  though  I  fear 
unsuccessful,  to  unfold  the  exceedingly  intricate  code  of 
natural  laws  involved  in  its  production,  distribution  and 
consumption.  If  the  principles  deduced  shall  be  found 
worthy  the  name  of  scientific  truths,  they  will  establish 
a  fact  which  very  few  are  prepared  to  admit  at  present ; 
namely,  that  all  the  phenomena  connected  with  wealth, 
are  produced  by,  and  subject  to,  uniform  natural  laws — 
laws  which  are  links  or  sections  of  that  vast  and  intricate 
labyrinth  known  as  the  Law  of  Causation.  The  practi- 
cal considerations  suggested,  by  contemplating  the  sub- 
ject in  this  somewhat  novel  aspect,  will  occupy  our 
attention  in  the  ensuing  chapters. 


CHAP.  I.j 


PART  2. 

OF  THE  ECONOMIC  FUNCTIONS   or  GOVERNMENT, 
CHAPTER  L 

Preliminary   remarks. — The  general  purposes    of 
government  considered. 

Assuming  the  principles  evolved  in  the  preceding 
chapters  to  be  the  essential  truths  of  the  science  of 
wealth,  I  will  now  proceed  to  bring  in  review  the 
economic  sections  of  the  framework  and  legislation  of 
governments — especially  those  of  our  OMn — and,  by  com- 
paring them  with  these  principles,  test  their  fitness  or 
adaptation  to  the  ends  designed — pointing  out  as  I  go  along 
such  defects,  and  suggesting  such  amendments,  as  seem 
to  be  required  in  order  to  make  these  features  of  the 
government  machine  conform  to  the  purpose  of  their 
invention  and  adoption.  In  other  words,  I  shall  attempt 
first,  to  present  a  plan  of  social  wealth  more  perfect 
than  any  now  in  use,  and  afterwards,  to  indicate  the 
rules  or  maxims  by  which  economic  legislation  should  be 
guided.  But  in  this,  as  in  the  first  division  of  the  work, 
I  shall  aim  at  nothing  more  than  the  presentation  of 
general  outlines,  or  roughly  drafted  models, — refraining, 
as  before  remarked,  from  any  attempt  to  elaborate  them 
13 


142  PROVINCE    OF    GOVERNMENT.  [PART.  II. 

into  finished  disquisitions,  under  the  conviction  that  I 
have  neither  the  capacity  nor  leisure  requisite  to  suc- 
cess. 

It  has  heen  already  noticed  that  the  means  by  which 
government  may  best  protect  the  life,  liberty  and  per- 
sonal faculties  of  the  citizen,  are  not  proper  subjects  of 
consideration  in  a  work  on  this  science.  These  lie 
within  the  province  of  Politics  ; — they  are  principles 
which  the  votaries  of  that  science  should  explain,  and 
which  statesmen  should  so  apply  in  practice  as  to 
promote  the  best  interests  of  society.  But,  although 
these  features  of  government  were  not  devised  and 
adopted  with  the  view  of  influencing  the  production,  dis- 
tribution, or  consumption  of  wealth,  yet  their  incidental 
aid  in  the  development  and  preservation  of  that  phenom- 
enon, has  proved  to  be  so  potent  that  a  treatise  on  political 
economy  would  be  manifestly  incomplete  without  some 
notice  of  them ;  and  especially,  of  their  points  of  contact 
with  this  department  of  political  science.  For  these 
reasons,  it  is  deemed  necessary  to  preface  this  division 
of  our  inquiry  with  a  brief  explanation  of  the  origin, 
nature  and  general  purposes  of  government. 

It  is  generally,  if  not  universally  held,  that  the 
Author  of  life  has  endowed  the  human  mind  with  an 
innate  or  intuitive  knowledge  of  right  and  wrong,  and 
with  a  sentiment  of  justice  which  never  fails  to  condemn 
the  wrong  and  approve  the  right ;  but  that  there  are 
other  sentiments  or  endowments  of  the  mind  running 
counter  to  these,  and  which,  if  not  restrained  by  exter- 
nal means,  rarely  fail  to  obtain  the  supremacy.  With- 
holding, for  the  present,  our  assent  to  the  assertion  con- 
tain in  the  first  clause  of  this  proposition,  it  is  believed 
there  can  be  no  doubts  regarding  the  soundness  of  the 
other.  Mankind  are  ever  prone  to  trespass  on  the  rights 


CHAP.  I.J     PROVINCE  OF  GOVERNMENT.          143 

of  one  another ;  and  so  strong  is  this  propensity,  that 
we  find,  where  each  individual  is  left  to  the  guidance  of 
his  own  nature,  that  the  rule  of  right  is  entirely  disre- 
garded, the  law  of  might  usurping  its  place,  even  to  the 
first  and  highest  natural  right  of  all  mankind,  the  right 
of  existence.  We  see  this  unpleasant  truth  exempli- 
fied, not  only  in  the  past  history  of  the  race,  but  in  some 
of  the  existing  practices  of  all  nations,  including  the  most 
civilized.  We  see,  for  example,  savage  tribes  striving, 
and  sometimes  successfully,  to  exterminate  each  other ; 
and  still  worse,  we  see  communities  the  most  civilized, 
in  defiance  of  the  restraints  imposed  by  the  law  of 
nations,  constantly  referring  international  differences 
to  the  arbitrament  of  the  sword,  or  the  law  of  strength ; 
and  we  should  see  individuals  invariably  obeying  the 
same  law,  but  for  the  hindrances  interposed  by  society. 
To  this  principle  of  human  nature  may  be  safely 
assigned  the  origin  of  government.  Mankind  doubtless 
perceived,  not  only  its  existence,  but  the  fatal  conse- 
quences resulting  from  it,  and  thereupon  devised  and 
adopted  the  Social  Contract  as  the  appropriate  remedy. 
By  means  of  this  device,  they  aimed,  so  far  as  social 
relations  are  concerned,  to  shift  the  supremacy  from  the 
natural  law  of  strength  to  the  artificial  rule  of  right. 
This  rule  is  by  no  means  uniform  ;  indeed,  so  diverse  is  it, 
that  we  find  each  political  community  or  nation  observing  a 
standard  peculiar  to  itself.  Amongst  savages,  the  con- 
tract referred  to  is  extremely  imperfect,  consisting  of  a 
simple  league  in  which  it  is  understood,  that  the  strongest 
shall  be  the  chief  to  whom  all  others  of  the  tribe  must 
yield  obedience ;  that  the  individual  members  shall  re- 
spect the  imperfectly  understood  rights  of  each  other,  and 
protect  them  from  foreign  aggression ;  and  that  the  law 
of  strength,  in  its  most  unmitigated  form,  shall  rule  their 


144  PROVINCE    OF    GOVERNMENT.          [PART.    II. 

intercourse  with  other  tribes.  Civilized  communities, 
and  especially  those  of  them  that  are  also  christianized, 
have  advanced  much  farther.  Guided  by  that  perfect 
rule  of  social  conduct,  conveyed  in  the  Christian  precept, 
"  do  unto  others  as  ye  would  that  others  should  do  unto 
you,"  and  following  the  promptings  of  a  more  enlight- 
ened public  judgment,  they  have  devised,  adopted  and 
enforced  social  contracts  and  codes  of  laws,  in  which 
they  have  aimed  to  embody  justice,  so  far  at  least  as 
that  principle  is  involved  in  social  relations  and  duties  as 
between  members  of  the  same  political  community. 
And,  by  means  of  the  international  code,  they  have 
aimed,  though  not  with  equal  success,  to  extend  the 
principle  to  external  relations  and  duties.  Some  nations 
have  gone  even  farther,  and  established  laws  for  the 
government  of  man  as  relates  to  his  duties  to  his  Maker 
and  to  himself.  Generally,  however,  laws  of  that  char- 
acter are  regarded  as  uncalled  for  and  unjust,  because 
they  unnecessarily  abridge  the  freedom  of  the  citizen, 
and  rarely  prove  beneficial  to  the  individual  or  the 
community. 

In  contemplating  this  subject  with  the  view  of  find- 
ing out  what  that  is  which  mankind  regard  as  justice, 
in  the  abstract,  our  attention  is  arrested  at  the  thres- 
hold by  the  remarkable  diversity  of  opinions.  No 
two  governments,  nor  even  any  two  individuals  of  the 
same  government,  agree,  in  all  respects,  as  to  what 
should  constitute  the  rule  of  right  in  social  inter- 
course. All  agree  that  the  rule  should  be  in  strict 
accordance  with  justice,  but,  unfortunately,  this  funda- 
mental principle  of  government,  if  it  exists  at  all,  is  so 
imperfectly  understood  that  it  is  itself  without  a  gener- 
ally received  definition  ; — in  other  words,  it  conforms  tc 
no  established  standard.  For  example,  some  of  the 


CHAP.    I.]  PROVINCE    OF    GOVERNMENT.  145 

ruder  tribes  consider  it  right  not  only  to  take  the  lives 
of  those  who  bear  to  them  the  relation  of  foreigners, 
whenever  they  have  the  power  to  do  so,  but  to  eat  them 
afterwards.  Others,  one  step  higher,  approve  of  the 
killing,  but  not  of  the  eating.  Others  again,  neither 
kill  nor  eat,  but  subject  to  slavery,  foreigners  and  their 
progeny,  whenever  the  latter  fall  into  their  power.  The 
history  of  our  own  nation  affords  a  notable  illustration 
of  this  class.  We  practised  upon  that  principle  until 
it  was  believed  the  stock  and  its  natural  increase  ren- 
dered the  supply  sufficient, — the  only  qualification  in 
our  case  being,  that,  by  reason  of  an  odd  fancy,  the 
application  of  the  principle  was  confined  to  a  particular 
color.  Others  again,  merely  withhold  from  foreigners 
the  priviledge  of  citizenship,  and  some  not  even  that. 
All  nations,  though  not  all  their  individual  members,  agree 
in  referring  international  disputes,  which  cannot  be  other- 
wise adjusted,  to  the  mutual  satisfaction  of  the  parties, 
to  the  law  of  strength  for  decision ;  and,  in  such  cases,  take 
life  and  destroy  property  with  as  much  alacrity  and  self- 
complacency  as  marks  the  performance  of  the  most  benefi- 
cent acts. — The  principle  of  justice,  as  exemplified  in  the 
internal  policy  of  nations,  we  find  to  be  equally  various. 
Some  place  supreme  and  absolute  power  in  the  possession 
of  one  individual, — all  others  having  no  rights,  being  sub- 
ject to  the  caprice  or  tyranny  of  the  sovereign.  In  these 
cases,  the  sparing  and  uncertain  privileges  enjoyed  by 
the  subjects  are  not  regarded  as  natural  rights,  but  as 
immunities  emanating  from  the  generosity  of  the  despot. 
Others  award  different  degrees  of  rights  to  different 
classes — as,  for  example,  under  political  organizations  of 
the  aristocratic  type.  Others  maintain  the  doctrine  of 
equal  rights,  and  aim  to  embody  and  enfore  that  stand- 
ard of  justice,  in  social  contracts  of  the  republican  form ; 
13* 


140  PROVINCE    OF    GOVERNMENT.  fPART    tt. 

but  these  same,  when  they  come  to  establish  the  details 
of  their  plan,  and  to  practice  upon  their  theory,  rarely 
fail  to  mete  out  to  the  rich  and  powerful  on  one  side, 
and  the  poor  and  friendless  on  the  other,  very  different 
principles  of  justice. 

Again  :  men  differ  in  opinion  as  to  the  justice  or  injus- 
tice of  almost  every  human  action.  There  are  those 
•who  conscienciously  believe  in  the  justice  of  murder — 
wilful,  premeditated  murder — provided  the  provocation  be 
strong.  Fraud  is  accounted  a  virtue  by  many  :  locali- 
ties might  be  named  where  this  opinion  is  entertained  by 
a  majority  of  the  inhabitants.  The  legal  remedy  for 
enforcing  the  obligation  of  contracts  was  recently  sus- 
pended by  our  national  legislature,  with  the  express 
design  of  permitting  debtors  to  escape  their  obligations  : 
the  right  of  property  in  actions,  to  the  amount  of 
untold  millions,  was  thus  expunged.  To  carry  the 
inquiry  and  illustrations  still  farther,  look  at  the  admin- 
istration of  justice.  Where  the  bench  consists  of  a 
plurality  of  members,  how  rarely  is  it  that  we  find  the 
award  unanimous  1  The  diversity  may  occasionally  arise 
from  different  interpretations  of  written  law,  but  more 
frequently,  from  a  difference  of  opinion  among  the  judges 
as  to  what  constitutes  justice. 

Now,  disclaiming  any  intention  to  start  a  doubt  in 
reference  to  the  truth  and  divine  origin  of  the  principles 
which  should  govern  social  intercourse,  as  expressed  and 
enjoined  upon  man  in  the  sacred  volume — I  must,  never- 
theless, in  view  of  the  diversified  opinions  and  ever  varying 
practices  of  men,  be  permitted  to  say,  that  I  place  little 
reliance  on  the  innate  sense  of  justice  which  the  human 
mind  is  supposed  to  possess.  I  believe,  on  the  contrary, 
that,  aside  from  revelation,  our  notions  of  justice  are  the 
offspring  of  our  desire  of  happiness,  and  that  what  we  call 


CHAP.    I.J  PROVINCE    OF    GOVERNMENT.  147 

the  rule  of  right  is  adopted  because  it  is  an  efficient  means 
of  promoting  happiness  ;  and  therefore,  that  the  stand- 
ard of  justice  will  be  high,  or  low,  according  to  the 
degree  of  true  knowledge  possessed  by  the  community 
or  the  individual  whose  rule  of  action  it  is.  If  it  were 
otherwise,  why,  I  would  ask.,  do  we  find  every  individual 
possessing  a  standard  of  justice  peculiar  to  himself,  and 
diifering  from  that  of  every  other  person.  Those  edu- 
cated in  the  light  of  the  gospel,  and  subscribing  to  its 
doctrines,  profess  to  make  that  the  guide  of  their  social 
actions  ;  but  it  is  very  often  merely  profession,  while 
their  practice  conforms  to  the  lower  standard  which 
results  from  their  imperfect  knowledge  of  their  true 
interests.  And  if  we  contemplate  the  condition  of  the 
heathen,  and  the  savage,  we  find  as  we  descend  the  scale 
of  knowledge,  a  lower  or  more  imperfect  standard  of 
justice  as  their  guide.  These  considerations  seem  to 
warrant  the  inference  that  a  knowledge  of  the  truth,  and 
virtuous  actions,  bear  to  each  other  the  relation  of  cause 
and  effect,  or  parent  and  offspring ;  and  that  ignorance 
and  vice  stand  in  the  same  relationship.  In  other  words, 
we  may  conclude,  that  the  more  perfectly  mankind 
understand  their  real  interests,  the  more  elevated  will 
be  their  standard  of  justice,  and,  consequently,  the  more 
perfect  and  efficient  the  social  machinery  for  restraining 
vice  and  advancing  virtue. 

We  find,  then,  that  the  only  legitimate  end  or  aim  of 
goverment  is,  the  augmentation  of  human  happiness  ; 
that  the  only  means  by  which  it  can  accomplish  that  end 
is,  either  by  lessening  the  action  of  causes  which  tend 
to  produce  misery,  or  by  stimulating  those  which  pro- 
duce happiness  ;  and  that  the  only  machinery  which  it 
is  competent  for  society  to  employ  in  the  matter,  is  the 
adoption,  and  (by  means  of  penalties  and  other  devices,) 


148  PROVINCE  OF  GOVERNMENT.     [PART.  II. 

the  enforcement  of  such  rules  in  relation  to  social  inter- 
course as  are  best  calculated  to  produce  these  effects. 
We  find  also,  that  the  greater  the  knowledge  the  more 
appropriate  the  rules,  and  the  more  efficient  the  machinery 
for  enforcing  them  ;  and  that  the  Golden  Rule  is  by  far 
the  most  perfect  and  appropriate  that  has  ever  been 
devised.  If  mankind  were  sufficiently  enlightened, 
society  would  adopt  that  rule,  and  so  construct  the 
machinery  of  government  as  to  enforce  upon  individuals 
the  injunctions  it  contains.  If  A  is  not  made  to  do 
unto  B,  C  &  Co.,  as  he  would  that  they  should  do  unto 
him,  then  B,  C  &  Co.  will  not  be  made  to  do  unto  A 
as  they  would  that  he  should  do  unto  them,  and  the  con- 
quence  is  that  all  are  less  happy.  But  if  the  rule  is 
made  obligatory  on  all  sides,  its  tendencies  are  all  in 
favor  of  happiness,  and  its  restraints  only  upon  actions 
which  produce  misery  :  it  gives  an  impulse  to  virtue  and 
a  paralysis  to  vice.  The  more  perfect  the  knowledge, 
the  more  rigorously  is  this  rule  enforced ;  and  not  only 
so,  but  the  more  virtuous  the  desires  which  constitute  the 
rule. 

Now,  of  the  three  classes  of  governments  (the  mo- 
narchic, the  aristocratic,  and  the  republican,)  under  one 
or  other  of  which,  all  political^  institutions  may  be 
grouped,  it  is  obvious  that  the  first  two  are  not  based 
on  the  principle  of  justice  embodied  in  the  golden  rule, 
but  upon  its  antagonist.  The  first  makes  the  will  of 
one  supreme,  the  second,  that  of  a  class.  In  either  case, 
the  rulers  cannot  do  unto  the  subjects  as  they  would 
that  the  subjects  should  do  unto  them  without  abolishing 
the  distinction  and  yielding  their  exclusive  power,  which 
would  at  once  transform  their  government  into  a  republic. 
The  sovereign  or  the  aristocratic  class,  for  example, 
desire  all  other  classes  to  obey  their  laws,  and  in  order 


CHAP.   I.J  PROVINCE    OF    GOVERNMENT.  149 

to  conform  to  the  golden  rule,  it  would  be  necessary 
for  them  to  desire  also,  that  all  other  classes  should  rule 
over  them,  which  presupposes  an  absurdity.  The  two 
desires  are  antagonistic,  and  cannot  exist  together. 

But  political  organizations  of  the  third  class — that 
class  which  is  based  on  the  principle  of  equality  and 
abides  by  the  will  of  the  majority — approach  much  nearer 
to  that  elevated  standard  of  justice  to  which  I  have 
referred.  Indeed,  the  fundamental  principles  of  repub- 
lican government  may  be  said  to  be  in  strict  accordance 
with  that  standard,  but,  in  consequence  of  deficient  know- 
ledge in  the  architects,  the  superstructure  is  not  equally 
perfect.  In  constructing  the  framework  of  government, 
and  in  filling  up  the  details  of  the  plan  by  means  of 
statutory  laws,  with  the  view  of  molding  those  princi- 
ples into  rules  for  practical  guidance,  both  the  scientific 
knowledge  and  the  artistic  skill  of  the  operations  have 
generally  proved  to  be  lamentably  deficient.  The  people 
of  the  United  States,  however,  have  made  a  very  success- 
ful effort  in  this  line.  They  have  not  attained  perfec- 
tion in  their  social  machinery,  it  is  true ;  but  their  poli- 
tical institutions,  save  one  dark  spot,  reflect  more  truly 
the  spirit  of  the  golden  rule,  than  those  of  any  other 
people  of  the  present  or  of  former  times.  This  fact  is 
conceded  even  by  the  enemies  of  republican  go vermnent, 
but  they  at  the  same  time  maintain  that  these  institu- 
tions are  so  deficient  in  powers  of  self-preservation,  to 
say  nothing  of  improvement,  that  they  must  soon  end  in 
anarchy.  This  opinion,  I  apprehend,  is  not  only  erro- 
neous, but  directly  opposed  to  the  truth ;  for,  unless  I 
am  greatly  mistaken,  there  is  in  republicanism  an  innate 
self-improving  property  which  no  other  form  of  govern- 
ment possesses.  Let  me  explain  : 

Government  is  the  instrument  employed  by  society  for 


150  PROVINCE    OF    GOVERNMENT.  [PART.    II. 

compelling  its   members   to   observe   the   principles  of 
justice,  or  the  rule  of  right  in  their  social  actions.     In 
doing  this,  what  is  evil  in  the  human  heart  is  restrained 
and  its   outbreaks  punished,  while  the  good  therein  is 
developed.     Now,  it  is  the  peculiar  excellence  of  repub- 
lican government  that  its  framework  is  in  strict  accord- 
ance with  that  design,  and  its  practical  results  tend  to 
the  complete  accomplishment  of  these  important  ends ; 
for,  whilst  all   are  prone   to  trespass  on  the  rights  of 
others,  and  each  desires  for  himself  the  exclusive  privi- 
ledge  of  doing  so,  they  are  each  and  all  unwilling  that 
others  should   trespass  upon   theirs ;  and,  since  it  is  a 
fixed  consequence  of  republicanism  that  every  privilege 
granted,  or  restraint  imposed,  must  be  embodied  in  laws 
made  by  the  majority  for  the  benefit  of  the  whole,  and 
to  which  all   are  alike  subject,  it  follows  that  the  pro- 
pensity  to  evil  will  be   effectually   restrained, — or,  at 
least,  that  it  cannot  find  countenance  in  the  law,  as  it 
does  where  government  is  based  on  the  principle  of  poli- 
tical inequality.    The  statute-books  of  the  United  States, 
both  state  and  national,  have,  it  is  true,  been  deformed 
by  numerous  acts  of  special  legislation ;  but  they  were 
the   offspring  of  ignorance  and*fraud,  and  are  rapidly 
disappearing  before  a  more  enlightened  public  opinion  ; 
and  when  a  majority  of  the  community  come  to  under- 
stand their  true  interests,  the  last  vestage  of  them  will  be 
expunged.     The  truth  is,  that  government,  in  a  republic 
like  ours,  where  all  participate  in  making  the  laws,  and 
all  are  alike  required  to  obey  them,  is  nothing  more  than 
the  legalized  expression  of  the   public  judgment  as   to 
the  best  social  means  of  promoting  the  happiness  of  each 
individually,  and  of  all  collectively ;  while,  under  gov- 
ernments based  upon  the  principle  of  inequality  in  civil 
and  political  rights,  where  the  few  rule  and  the  many 


CHAP.    I.j  PROVINCE    OF    GOVERNMENT.  151 

obey,  the  governing  class  has  the  power  to  choose  between 
the  adoption  of  a  false  system,  (so  contrived  as  to 
promote  their  own  interests  at  the  expense  of  those  they 
govern,)  on  one  side,  and  that  of  a  true  and  just  one  on 
the  other.  Our  knowledge  of  human  nature,  as  well  as 
the  records  of  history,  indicate  with  sufficient  clearness, 
their  invariable  choice.  Thus,  while  governments  based 
upon  the  principle  of  equality,  permit  no  social  wrongs, 
except  through  ignorance,  those  founded  in  inequality  often 
not  only  permit,  but  legalize  them  as  a  matter  of  choice. 
While  the  former  secure  their  own  stability,  and  tend  to 
perpetuate  themselves  by  means  of  the  superior  benefits 
they  confer,  the  latter  are  now  tottering  under  the  dis- 
pleasure of  those  upon  whom  their  wrongs  are  inflicted  ; — 
while  the  former,  by  an  equal  distribution  of  benefits, 
elevate  the  masses,  and,  by  increasing  the  aggregate 
of  benefits,  augment  knowledge,  and  thereby  tend  to 
elevate  the  standard  of  justice  higher,  and  still  higher — 
each  step  in  advance  paving  the  way  for  the  next, — the 
latter  tend  to  degrade  the  masses,  lessen  the  benefits  of 
government  and  lower  the  standard  of  justice  :  the  only 
counteracting  tendency  calculated  to  prevent  the  adop- 
tion, by  the  ruling  class,  of  an  undisguised  and  unmiti- 
gated system .  of  plunder  towards  their  subjects,  being 
the  fear  of  retribution. 

In  view  of  what  has  now  been  said,  I  may  venture 
to  assert,  that  the  republican  is  the  best  known  form  of 
government ;  that  political  institutions  based  on  the 
principle  of  equality,  and  constructed  in  conformity  to 
it,  are  the  best  known  social  means  of  augmenting  indi- 
vidual happiness  ;  and  hence,  that  the  chief  duties  of 
government  are  : 

1.  The  protection  of  life,  this  being  the  basis  on 
which  all  other  rights  depend. 


152          PROVINCE  OF  GOVERNMENT.    [PART.  II. 

2.  The  protection  of  personal  faculties,  physical  and 
mental. 

3.  The  protection  of  personal  freedom,  and  the  recog- 
nition and  enforcement  of  the  principle  of  equality,   so 
far  as  it  relates  to  civil  and  political  rights. 

4.  The  establishment  and  enforcement  of  such  rules 
in  reference  to  the  family  relations  as  will  most  effectually 
promote  the  happiness  thereof. 

5.  The   recognition   and   enforcement  of  the  right  of 
property  in  value  produced. 

6.  The  institution   and   enforcement  of  the  right  of 
property  in  Land. 

7.  The  regulation  of  commerce. 

8.  The  production  of  money  and  the  regulation  of  its 
value. 

9.  The   institution  and  enforcement  of  the  right  of 
property  in  actions. 

10.  The  assessment  and  collection  of  taxes  sufficient 
to  defray  the  expenses  of  government,  and  to  provide  for 
the  education  and  support  of  the  infirm  and  friendless 
poor. 

To  these  might  he  added  some  duties  of  minor  im- 
portance, but  as  I  am  not  writing  a  treatise  on  politics, 
we  will  not  stop  to  emunerate  them.  Nor  have  we 
strictly  speaking,  any  thing  to  do  with  the  four  classes  o 
governmental  duties  first  named,  for  they  too  belong  to 
the  science  just  referred  to;  but  it  is  manifest  that  there 
can  be  no  advancement  in  wealth  where  these  duties  are 
not  well  performed.  If,  for  example,  there  be  no  secu- 
rity of  life  and  of  personal  faculties,  there  can  be  no 
security  of  property,  nor  indeed,  any  property  to  secure. 
If  government  unjustly  interferes  with  individual  rights 
and  needlessly  restrains  personal  freedom,  the  example 
will  be  followed  by  individuals,  and  thus  the  cords  which 


CHAP.    I.]  PROVINCE   OF    GOVERNMENT.  153 

bind  society  together,  will  be  loosened,  the  community 
demoralized,  and  the  superstructures — wealth  and  civili- 
zation— razed  to  the  ground.  If  there  be  an  infringe- 
ment of  the  rule  of  political  equality,  the  aggrieved 
will  never  rest  satisfied  until  the  inequality  is  removed ; 
and  if  the  marriage  contract  be  not  enforced,  and  the 
parents  compelled  to  provide  for  and  educate  their 
offspring,  knowledge  cannot  advance,  nor  industry 
possess  the  requisite  vigor  and  skill  to  so  direct  and 
aid  the  processes  of  production,  as  to  preserve,  much 
less  augment,  the  existing  volume  of  wealth.  There- 
fore, it  is  manifest,  that  the  development  and  pre- 
servation of  wealth  cannot  fail  to  be  greatly  in- 
fluenced by  the  manner  in  which  these  various  du- 
ties are  performed.  But  since  it  is  not  our  province 
to  inquire  as  to  the  best  methods  of  performing  them, 
we  must  dismiss  these  topics  with  this  brief  refer- 
ence to  their  politico-economic  bearing,  and,  with  the 
assumption  that  the  duties  referred  to  are  well  perform- 
ed, proceed  to  point  out  the  true  policy  of  government, 
in  regard  to  the  six  classes  of  duties  connected  with 
social  wealth.  It  is  proposed  to  devote  a  chapter  to  the 
consideration  of  each. 


14 


CHAP.  II. j  155 


CHAPTER  2. 

OF  THE  RECOGNITION  AND  ENFORCEMENT  OF  THE  RIGHT 
OF  PROPERTY  IN  THE  PRODUCTS  OF  INDUSTRY,  CA- 
PITAL AND  LAND. 

The  origin  and  nature  of  this  right,  as  well  as  the 
motives  which  prompt  its  social  recognition  and  guaranty, 
have  been  sufficiently  explained  in  the  first  division  of 
our  treatise  ;  hut  we  have  yet  to  define  its  just  limits, 
and  to  indicate  the  best  social  means  of  securing  to  indi- 
viduals its  undisturbed  enjoyment. 

First,  as  to  its  proper  limits.  The  right  of  property, 
so  far  as  the  value  thereof  consists  of  one's  own  indus- 
trial service,  follows  necessarily  from  the  right  to  live 
in  the  possession  and  use  of  our  faculties,  because,  as 
we  have  seen,  this  element  of  property  originates 
in  the  exercise  of  mental  and  physical  powers, — the 
value  resulting  from  their  exercise,  being  neither 
more  nor  less  than  the  continued  existence  of  in- 
dustrial service,  after  it  has  passed  from  the  indivi- 
dual to  the  matter  upon  which  his  powers  have  been 
exerted  ;  and  if  the  individual  is  entitled  to  life 
and  to  the  possession  of  his  faculties,  it  is  clear 
that  he  has  an  equal  right  to  exert  them  in  advancement 
of  his  happiness,  provided  it  be  not  done  in  a  way  to 
mar  the  happiness  of  others.  So  far  as  the  value  con- 
sists of  the  productive  service  of  capital,  the  right  of 
property  results  from  the  right  just  named,  since,  if  the 
individual  has  the  exclusive  right  to  the  value  created  by 
bis  industrial  service,  it  is  manifest  that  his  right  to  the 


156  RIGHT  OF  PROPERTY.  [PART    II. 

products  of  that  value,  is  equally  exclusive  and  valid. 
To  the  extent  that  the  value  of  property  is  made  up  of 
the  appropriated  natural  agents  and  their  productive  ser- 
vice, the  right  has  its  origin  in  the  Social  Contract ;  but 
it  is  also  involved  in,  and,  in  practice,  necessarily  results 
from,  the  right  to  the  other  two  elements  of  property,  since 
all  who  possess  land,  have  either  given  an  equivalent  of 
industry  or  capital  in  exchange  for  it,  or  they  have 
inherited  it  from  those  who  had  acquired  their  title  or 
exclusive  right  in  that  way.  The  right  to  the  sort  of 
property  last  named,  although  widely  different  in  origin 
and  nature  from  the  right  to  the  other  elements  of 
property,  is  founded  on  a  principle  equally  just,  and 
should  be  held  no  less  sacred,  as  I  shall  aim  to  demon- 
strate in  the  next  chapter. 

The  right  of  property,  therefore,  as  recognized  and 
enforced  by  society,  extends  to  and  includes  skill,  labor, 
capital  and  land,  and  the  value  created  by  the  produc 
tive  service  of  these  prime  agents  of  wealth  :  it  includes 
the  sources  of  property  and  their  productive  employ- 
ment, as  well  as  property  itself.  These  seem  to  be  its 
proper  boundaries.  It  does  not,  or  rather  it  should  not, 
go  beyond  them ;  nor  is  it  expedient  that  it  should 
be  regarded  as  absolute  within  them.  When  the  right 
is  so  exercised  as  to  avoid  the  production  of  consequences 
injurious  to  society,  it  should  be  secured  to  individuals 
without  qualification  or  reservation; — thus  far  the  develop- 
ment and  preservation  of  wealth,  and,  consequently, 
the  general  welfare,  imperatively  demand  its  social  gua- 
ranty. But  when  the  productive  agents  are  so  employed 
by  individuals  as  to  produce  consequences  adverse  to  the 
general  happiness,  or  when  like  results  follow  from  the 
simple  possession  of  property,  it  is  the  duty  of  society 
to  limit  the  right,  either  by  withholding  the  needful  pro. 


CHAP  II.]  RIGHT   OF   PROPERTY.  157 

tection,  or  by  interposing  the  necessary  restraints.  For 
instance,  an  individual  should  not  be  permitted  to  enjoy 
the  right  of  property  when  its  nature  is  such  as  to  des- 
troy the  relative  rights  of  others,  as  in  the  case  of  sla- 
very ;  nor  should  he  be  permitted  even  to  hold  legitimate 
property,  when  its  nature  and  the  attending  circumstances 
are  such  as  to  put  in  jeopardy  the  lives  or  the  property 
of  others,  as,  for  example,  in  the  storing  of  powder  in  a 
city  or  populous  neighborhood.  As  relates  to  the  em- 
ployment of  the  productive  forces,  an  individual  should 
not  be  allowed  to  prosecute,  in  a  densely  peopled  dis- 
trict, any  business  calculated  to  engender  pestilence  or 
to  destroy  the  property  of  others.  He  should  not  be 
permitted  to  engage  in  such  occupations  as  tend  to  im- 
poverish or  demoralize  the  community, — as,  for  example, 
in  the  production  and  sale  of  intoxicating  drinks — nor 
in  those  which  are  unproductive  of  value,  such  as  the 
selling  of  lottery  tickets,  and  other  kinds  of  gambling. 
In  short,  whatever  process  of  production  is  found  to  yield 
more  of  evil  than  of  good,  to  be  more  productive  of  mi- 
sery than  of  happiness,  in  its  general  consequences,  should 
be  not  only  excluded  from  the  social  guaranty,  but  its 
exercise  strictly  prohibited  by  the  laws  of  society  :  it 
should  be  regarded  as  a  wrong  requiring  suppression, 
rather  than  as  a  right  entitled  to  protection.  The  public 
good  clearly  requires  this  limitation,  which  fact,  when  it 
comes  to  be  generally  perceived,  will  impel  the  social  voice 
to  demand  it ;  and  thus,  in  republics  at  least,  where  the 
laws  are  but  legalized  expressions  of  the  public  will, 
the  limitation  will  be  established. 

It  will  be   seen  that  the  right  of  property,  as  here 

defined,  differs  somewhat  from  the  standard  recognized 

and   established  by  our   constitutions   and   laws.     The 

external  boundaries  of  the  two  differ  in  this,  that  our 

14* 


158  RIGHT    OF    PROPERTY.  [PART    II. 

legalized  standard  includes  the  right  of  property  in  human 
beings,  and  the  right  of  property  in  actions,  both  of  which 
our  definition  excludes  :  and  the  reasons  therefor,  will  be 
given  in  subsequent  chapters  on  slavery  and  credit,  as  it 
is  believed  the  importance  and  intricacy  of  the  questions 
involved,  clearly  entitle  each  of  these  subjects  to  a  dis- 
tinct consideration.  The  internal  limitations  of  the  two 
also  differ  essentially  in  degree,  if  not  in  kind.  I  would 
not  only  withhold  protection,  but  interdict  the  enjoyment 
of  the  right  of  legitimate  property,  in  certain  cases  where 
our  social  machinery  protects  it, — protects  it  subject  to  li- 
mitations, it  is  true,  but  these  are  at  best  feeble,  and 
withal,  rarely  enforced.  Take,  for  example,  the  produc- 
tion, importation  and  sale  of  ardent  spirits.  Our 
government  recognizes  these  as  rights,  and  it  protects 
individuals  in  their  enjoyment,  subject  to  no  other  res- 
traints than  such  as  are  afforded  by  the  imposition  of 
taxes  somewhat  higher  than  those  assessed  on  other  kinds 
of  property  ,and  on  other  pursuits.  This,  however, 
imposes  no  practical  restraints,  because  the  augmented 
taxes  are  paid  by  the  consumers  in  the  increased  price 
of  the  product.  The  enhanced  price  does  indeed  slightly 
diminish  the  consumption,  and  thus  indirectly  restrains 
the  production  and  distribution ;  but,  in  this  case,  the  de- 
gree is  too  inconsiderable  to  produce  practical  benefits. 

Aside  from  its  medicinal  and  chemical  properties — if 
indeed  these  constitute  exceptions — alcohol  is  wholly 
destitute  of  real  utility.  It  is  not  only  destitute  of  use- 
ful properties,  but  fraught  with  those  of  a  contrary  na- 
ture. In  view  of  the  frightful  amount  of  human  misery 
it  has  produced,  we  are,  perhaps,  warranted  in  regard- 
ing it  as  the  most  potent  instrument  of  evil  the  world 
has  ever  known.  Be  this,  however,  as  it  may,  I  can- 
not be  mistaken  in  saying — since  every  one's  observa- 


CHAP.    II.]  RIGHT    OF    PROPERTY.  159 

tion  and  experience  will  confirm  its  truth — that  the  ge- 
neral wellfare  is  lessened  by  its  presence ;  that  it  re- 
tards the  development  of  wealth,  and  hastens  its  con- 
sumption ;  that  it  augments  misery  and  diminishes  hap- 
piness ;  and  hence,  that  its  suppression,  or  the  interdic- 
tion of  its  production  and  distribution,  would  be  beneficial 
to  society.  If  the  evils  resulting  from  alcohol  were 
confined  to  those  who  consume  it,  society  might  not  feel 
justified  in  interposing  restraints.  It  would  then  be  a 
matter  in  which  it  had  no  interest,  the  individuals  and 
their  own  consciences  being  the  only  parties  concerned. 
It  is  well  known,  however,  that  such  is  not  the  case. 
Nearly  all  the  trespasses  on  the  rights  of  life,  personal 
faculties,  and  property,  as  well  as  most  of  the  demands 
for  public  charity,  result  either  directly  or  indirectly 
from  this  fruitful  source,  to  say  nothing  of  the  misery 
inflicted  on  women  and  children  by  the  intemperance  of 
husbands  and  fathers.  It  is,  therefore,  competent  for 
society  to  exercise  its  prerogative  in  suppressing  the  evil, 
— as  clearly  so,  it  appears  to  me,  as  to  suppress  any  other 
social  evil ;  and,  in  view  of  the  good  which  might  be  thus 
attained,  I  hold  it  to  be  the  duty  of  government  to  pro- 
nounce the  production,  importation,  and  sale  of  alcohol, 
severally,  misdemeanors,  and  to  suppress  them  by  means 
of  the  needful  penalties  and  punishments.  This  sug- 
gestion may  appear  illiberal, — doubtless  it  will  be  so  re- 
garded by  many, — but  when  we  reflect  on  the  lamenta- 
ble social  evils  produced  by  alcohol,  and  remember  that 
we  may  search  in  vain  for  its  compensating  benefits,  we 
should  rather  be  astonished  that  society  has  so  long  ne- 
glected the  performance  of  such  a  manifest  duty  to 
itself. 

If  it  be  objected  that  the  assumption  of  this  preroga- 
tive, on  the  part  of  society,  would  be  an  unauthorized  in- 


160  RIGHT    OF   PROPERTY.  [PART    II. 

terference  with  individual  rights,  it  may  be  answered 
that  the  propensity  to  drink  to  excess,  like  the  pro- 
pensity to  steal,  cheat,  or  gamble,  is  one  of  those  hurt- 
ful and  unruly  desires,  which  the  conscience,  aided  by 
divine  law,  is  unable  to  keep  at  all  times  in  subjection 
to  the  judgment ;  and  since  every  act  of  insubordination 
produces  consequences  injurious  to  society,  it  follows 
that  society  is  warranted  in  interposing  the  restraints 
necessary  to  protect  its  own  rights.  The  exercise  of 
this  social  prerogative  would  be  in  strict  accordance  with 
the  general  maxim  of  republicanism,  which  enjoins  that 
line  of  policy  which  will  secure  the  greatest  good  of  the 
greatest  number.  Indeed,  we  may  go  further,  and  af- 
firm, that  the  suppression  of  the  product  and  traffic  under 
consideration,  would  be  productive  of  good  unmixed  with 
evil ; — the  happiness  not  only  of  the  majority,  but  of 
the  whole,  would  be  promoted  by  it.  It  is  well  known 
that  a  large  portion  of  the  crimes  committed  are  either 
superinduced  or  directly  prompted  by  the  consumption 
of  this  product.  It  is  deemed  proper  that  society  should 
exercise  the  prerogative  of  punishing  those  who  commit 
these  trespasses, — the  plea  of  intoxication  not  being  re- 
garded by  the  law  as  even  a  mitigating  circumstance. 
How  manifestly  proper,  therefore,  that  society  should 
exercise  the  milder  but  far  more  efficacious  prerogative, 
of  suppressing  the  cause  which  prompts  their  commis- 
sion. It  would  thus  uproot  the  evil,  and  thereby  avoid 
the  injurious  consequences  of  the  offence,  as  well  as  of 
the  punishment.  Crimes  which  result  from  the  innate 
depravity  of  the  perpetrator,  cannot  be  prevented  by 
suppressing  their  cause.  Society  has  not  the  power  to 
exterminate  the  vicious  propensities  of  its  individual 
members.  It  cannot  dry  up  human  passions  and  evil 
desires,  as  it  can  the  fountains  of  rum.  It  is  compelled. 


flHAP.    II.]  RIGHT    OF   PROPERTY.  161 

therefore,  in  reference  to  this  class  of  crimes,  to  adopt 
the  expedient  of  penalties  and  punishments  :  it  has  no 
other  direct  remedy.  But  in  regard  to  the  crimes  and 
other  social  evils  which  result  from  alcohol,  there  is  no 
such  compulsion.  There,  the  root  of  the  evil  is  detached 
from  humanity — detached  even  from  animal  and  vege- 
table life.  It  stands  entirely  alone,  an  inanimate  com- 
pound of  evil,  extracted  by  man  from  the  products  of  na- 
ture, as  if  to  show  the  extent  to  which  his  genius  and 
industry  can  be  perverted.  Thus  isolated,  without  the 
semblance  or  order  of  utility  about  it,  society,  by  in- 
terdicting its  future  production  and  distribution,  may 
completely  exterminate  this  fruitful  source  of  crime  and 
misery,  without  injury  or  injustice  to  a  single  individual. 
When  this  question  shall  have  passed  through  the  puri- 
fying process  of  scientific  investigation  and  discussion ; 
when  philosophic  statesmen  shall  have  divested  it  of  its 
prejudices  and  errors,  so  that  its  true  merits  may  be  un- 
derstood, I  have  not  the  slightest  doubt  that  all  re- 
publican societies  will  adopt  and  enforce  the  limitation 
of  the  right  of  property  herein  suggested.  If  it  should 
be  considered  necessary  to  continue  the  use  of  alcohol  in 
the  practice  of  medicine,  and  in  the  arts,  government 
might  authorize  the  production  and  distribution  of  a 
specific  quantity  for  those  purposes  ;  or  it  might  assume 
the  task  of  producing  and  distributing  it  by  means  of 
its  own  agents. 

If  there  are  any  other  rights  of  property  now  recog- 
nized and  protected  by  government,  which,  in  a  social 
point  of  view,  are  more  productive  of  poverty  than  of 
wealth,  or  of  misery  than  happiness,  they  may  be  class- 
ed with  the  above  ;  and,  for  the  reasons  already  given, 
society  should  convert  its  protection  into  prohibition. 
The  same  might  be  said  of  all  civil  and  political  rights ; 


162  RIGHT    OF    PROPERTY.  [PART    II. 

but  as  these  lie  without  the  boundaries  of  our  subject, 
they  are  referred  to  merely  for  the  purpose  of  excluding 
them ; — though  it  will  have  been  seen  that,  in 
discussing  the  questions  connected  with  the  just 
limitations  of  the  right  of  property,  I  have  been 
compelled  to  push  my  inquiries  into  the  very  cen- 
tre of  the  field  of  political  science,  in  order  to  ascer- 
tain the  effects  of  certain  divisions  of  this  right  on  the 
general  welfare  and  happiness ;  for  in  the  absence 
of  this  knowledge,  we  could  not  decide  intelli- 
gently as  to  the  validity  of  the  right.  Without  occa- 
sional departures  of  this  kind  from  our  appropriate  pro- 
vince, for  the  purpose  of  tracing  out  the  ultimate  conse- 
quences of  specific  causes,  our  inquiry  would  be  mani- 
festly incomplete,  if  not  altogether  worthless. 

Another  right  recognized  and  enforced  by  some  go- 
vernments, though  not  by  all,  is  the  right  of  gambling. 
This  may  be  regarded  as  a  right  of  property,  because 
those  who  exercise  it  do  so  with  the  view  of  procuring 
property.  It  should  be  not  only  excluded  from  the  so- 
cial guaranty,  but  its  exercise  forbidden,  for  the  reason 
that  its  social  consequences,  like  those  emanating  from 
the  production  and  distribution  of  rum,  are  evil  unmixed 
with  good  ;  and  for  the  additional  reason  that  it  is  un- 
productive of  value  in  any  form.  It  is  the  distinguish- 
ing attribute  of  gambling — an  attribute  by  which  it  may 
be  recognized  under  whatever  disguise  it  chooses  to  as- 
sume— that  it  yields  no  product.  In  its  processes,  skill, 
and  labor,  and  capital,  and  land,  are  always  employed, 
but  no  value  of  any  kind  ever  results  from  their  services. 
At  the  end  of  each  and  every  process,  the  quantity  of 
value  is  the  same  as  at  the  commencement, — at  least, 
there  is  no  increase.  The  value  merely  changes  hands  ; 
what  one  gains  another  loses  ;  while  the  productive 


CHAP.    II. J  RIGHT     OF    PROPERTY.  163 

agents  thus  employed  must  be  maintained,  or  kept  in 
repair,    by    consuming    wealth    produced    by    others. 
Gambling,  so  far  as  it  affects  society,  may  be  classed 
with    counterfeiting,    cheating,    stealing    and    robbing. 
They  all   require  an  outlay  of  productive  service,  but 
neither   produces   value ;  they   each   aim,  by   different 
methods,  to  procure  the  property  of  others  without  giv- 
ing an  equivalent ;  and  they  all  rely  on  the  same  quali- 
ties of  human  nature  to  furnish  them  victims,  namely, 
ignorance  and  credulity.     If  either  vocation  is  less  tole- 
rable than  the  others,  I  hold  it  to  be  gambling.     Its 
votaries  seem  to  be  more  completely  divested  of  con- 
scienciousness ;  for  while  they  will  strip  a  victim  of  the 
last  vestige  of  his  property,  without  any  apparent  com- 
punctions, those   who   follow  the  other    vocations    are 
usually  satisfied  with  a  small  share.     Besides,  the  first 
not  only    strips  its  victims   of  their  property,  but  of 
their    virtue     as    well,     while    the    latter    leave    the 
character  of  the  victim  unimpaired.     For  these  reasons, 
gambling  should  be  regarded  as  a  crime  rather  than  as 
an  individual  right.     The  prevailing  error  of  society  on 
this  subject,  as  evidenced  by  its  laws,  is,  that  it  regards  it 
as  neither :  gambling  is  excluded  from  the  list  of  indi- 
vidual rights,  but  it  is  not  included  in  the  list  of  social 
prohibitions. 

The  term,  gambling,  is  here  employed  in  its  widest 
signification,  in  which  it  denotes  not  only  the  act  of 
gaming  for  money,  and  the  traffic  in  lottery  tickets,  but 
every  other  occupation  or  calling  which  is  unproductive  of 
value,  such  as  purely  speculative  operations  in  stocks  and 
merchandize,  and  in  all  other  kinds  of  property.  He  who 
sells  1000  bbls.  of  flour  at  a  given  price,  to  be  delivered 
on  a  future  day,  not  having  the  flour  either  in  possession 
or  expectation,  in  effect  merely  wagers  that  the  article 


164  RIGHT    OF    PROPERTY.  [PART    II. 

will  decline  in  price,  while  the  purchaser  wagers  that 
the  price  will  rise.  And  if  the  flour  be  actually  deliver- 
ed, and  the  purchaser  has  no  other  motive  than  specula- 
tion— if  he  buys  with  the  sole  view  of  holding  for  a  rise, 
without  any  purpose  of  distribution — then  the  transaction 
on  his  part  should  also  be  denominated  gambling,  be- 
cause it  is  unproductive  of  value.  These  remarks  will 
apply  to  all  purchases  and  sales  purely  speculative ; 
but,  since  transactions  of  this  character  closely  resemble 
the  legitimate  operations  of  commerce,  and  rarely  take 
place  without  some  admixture  of  the  latter,  it  would  be 
exceedingly  difficult  for  society  to  suppress  them,  and  at 
the  same  time  avoid  an  improper  interference  with  the 
exercise  of  legitimate  rights.  It  is  believed,  however, 
that  gambling  operations  in  stocks,  and  some  other 
transactions  of  like  character,  might  be  included  in  the 
social  prohibition,  with  advantage  to  the  community,  and 
without  doing  violence  to  the  legitimate  rights  of  indi- 
viduals. 

Here  it  may  be  well  to  say  a  few  words  in  explana- 
nation  of  the  legitimate  boundaries  of  commerce,  lest  it 
be  supposed  that  I  have  fallen  into  the  popular  error  of 
believing  that  merchants,  and  especially  jobbers  of  mer- 
chandize, are  non-producers.  This  fallacy,  if  not  gene- 
ral, is  at  least  widely  entertained.  It  has  its  origin  in 
the  fact  that  merchants  sell  the  identical  commodoties 
they  pbuy,  without  either  producing  them  or  changing 
their  qualities  or  their  forms.  It  is  perceived  that  agricul- 
turists produce  wealth  by  increasing  the  products  of 
the  soil,  and  that  manufacturers  and  artizans  produce  it  by 
altering  the  forms  of  these  products,  so  as  to  fit  them 
for  use  and  consumption ;  but  the  equally  indis- 
pensable, and  therefore  productive  service,  which  the 
merchant  performs  in  shifting  their  locality,  and  in  making 
the  distribution,  seems  to  have  escaped  the  observation 


CHAP.    II.]  RIGHT    OF    PROPERTY.  165 

of  those  who  thus  err.  Commerce  performs  the  office  of 
distributing  wealth.  Merchants  are  the  prime  agents  of 
commerce  ;  they  direct,  superintend,  and  accomplish  its 
processes.  Every  merchant  through  whose  hands  commo- 
dities pass,  during  their  journey  from  producers  to  manu- 
facturers or  consumers,  increases  their  value,  either  by 
placing  them  nearer  the  point  of  ultimate  destination,  or 
by  actually  accomplishing  their  distribution.  Take, 
for  an  illustration,  the  commodity  tea.  This  product 
is  more  valuable  in  the  warehouse  of  the  merchant 
of  Canton,  than  it  is  in  the  hands  of  its  producer,  be- 
cause it  is  then  nearer,  or  more  accessible  to,  its  con- 
sumers. It  is  still  more  valuable  in  the  hands  of  the 
New  York  importer,  and  for  the  same  reason.  When 
it  passes  to  the  hands  of  the  New  York  jobber,  its 
value  is  again  enhanced,  not  in  virtue  of  its  shifted  loca- 
lity, (for  in  this  case  no  material  change  of  place  oc- 
curs), but  for  the  reason  that  it  is  then  accessible  to  the 
retailer,  in  quantity  and  quality  adapted  to  his  wants. 
And  so  the  latter,  by  placing  it  within  the  reach  of  consu- 
mers, gives  another  and  final  addition  to  its  value.  It 
is  thus  in  relation  to  all  other  commodities  which  pass 
through  the  channels  of  commerce :  each  intermediate 
agent  is  necessary  to  their  cheap,  expeditious  and  perfect 
distribution.  Were  it  not  so,  the  laws  of  trade  would 
promptly  expel  the  unproductive  agents,  by  rendering 
their  vocations  unprofitable.  In  fact,  they  do  thus  expel 
not  only  the  supernumerary  votaries  of  commerce,  but 
its  unnecessary  agencies  and  machinery  as  well ;  by  which 
means,  that  department  of  production  is  kept  within  its 
legitimate  or  useful  limits. 

Thus  far  in  our  examination  of  the  right  of  property, 
we  have  searched  only  for  errors  of  enlargement, — that 
is,  for  features  of  the  right,  as  now  established  by  law, 
15 


166  RIGHT    OF    PROPERTY.  [PART    II 

which  the  public  good  requires  should  be  either  curtailed 
or  abolished.  We  have  next  to  inquire  in  what  res- 
pects, if  any,  the  right  has  been  improperly  abridged. 
So  far  as  our  government  is  concerned,  its  errors  of  this 
character  consist  mainly  of  laws  conferring  exclusive 
privileges,  and  of  those  relating  to  the  interest  of  money. 
It  must  not  be  forgotten  that  the  right  of  property 
includes  the  right  of  using  it,  or  employing  it  produc- 
tively, (provided  it  be  exercised  without  detriment  to 
others)  as  well  as  the  right  of  holding  it ;  for  without  this, 
its  recognition  and  enforcement,  would  confer  no  benefits. 
Now,  in  granting  to  an  individual  or  class  the  exclusive 
privilege  of  prosecuting  a  given  process  of  production,  the 
relative  rights  of  those  excluded  are  necessarily  abridged. 
In  fact,  every  grant  of  this  kind  should  be  entitled  u  an 
act  to  restraint  all  men  except  A,  B  &  Co.  from  employ- 
ing their  industry,  capital  or  land  in  the  production  of, 
&c."  If  the  business  or  vocation  yields  good  fruits, 
if  it  tends  in  the  main  to  augment  wealth  and  promote 
the  general  welfare,  the  right  to  prosecute  it  should  be 
enjoyed  by  all ;  if  injurious,  it  should  be  withheld  from 
all.  Class  legislation  is  a  strange  anomaly  in  a  repub- 
lic, for  it  is  opposed  to  every  principle  on  which  that 
form  of  government  is  based.  It  can  only  result  from 
fraud  or  ignorance  on  the  part  of  the  representatives, 
and  can  only  be  endured  by  a  constituency  profoundly 
ignorant  of  its  real  interests. — Usury  laws  are  free  from 
the  odium  of  benefiting  one  class  at  the  expense  of 
another,  for  they  injure  the  borrowing  interest  quite  as 
much  as  they  do  the  lending  ;  but  they  are  obnoxious  to 
the  charge  of  imposing  a  general  restraint  on  the  exer- 
cise of  a  legitimate  right,  and  of  thus  retarding  the 
production  of  wealth.  Money,  like  industry,  land,  or 
capital  in  any  other  form,  is  a  productive  agent.  Any  mo- 


CHAP.    II. J  RIGHT    OF    PROPERTY.  167 

tives  of  policy,  which  may  seem  to  authorize  a  legal  limi- 
tation of  its  revenue,  will  furnish  reasons  equally  valid 
for  limiting  the  revenue  of  all  other  productive  agents  ; 
but,  until  it  is  demonstrated  that  the  world  is  getting  rich 
too  fast,  no  sufficient  warrant  can  be  found  for  either. 
Whenever  money  becomes  scarce,  the  inevitable  tendency 
of  usury  laws  is,  to  divert  it  from  channels  of  greater  pro- 
ductiveness to  those  of  less,  by  which  means-  the  develop- 
ment of  wealth  is  restrained.  It  is  well  known  that  those 
laws  also  tend  to  demoralize.  Their  injustice  andabsur- 
dity  challenge  the  contempt  rather  than  the  respect  of  the 
community,  and  give  birth  to  all  sorts  of  ingenious  devi- 
ces to  evade  them,  and  even  to  frequent  acts  of  open 
violation ;  all  of  which  tends  to  impair  the  force  of  just 
and  necessary  laws.  The  mischievous  consequences  of 
those  laws  are,  therefore,  obvious  and  certain  ;  and  yet 
we  may  search  in  vain  for  a  single  benefit  derived  from 
them.  They  are  productive  of  evil  unmixed  with  good, 
and  hence,  should  be  abolished.  There  is  no  sufficient 
reason  why  the  right  of  property  in  money  should  be 
denied,  in  its  exercise  and  productive  employment,  the 
same  degree  of  freedom  that  the  right  of  property  in 
industry,  land,  houses,  and  machinery  is  permitted  to 
enjoy. 

Having  thus  imperfectly  defined  the  right  of  property, 
and  pointed  out  what  I  conceive  to  be  the  chief  errors 
of  our  policy  in  regard  to  its  institution,  it  now  remains 
to  consider  the  best  social  means  of  securing  to  individuals 
its  undisturbed  enjoyment, — in  other  words,  the  best 
means  of  protecting  property  from  stealth,  violence  and 
fraud.  It  will  be  perceived  that  this  inquiry  leads  di- 
rectly to  the  province  of  criminal  jurisprudence;  but  it 
needs  scarcely  be  said,  that  I  am  not  about  to  enter  a  field 
so  vast,  and  with  the  principles  of  which  I  am  so  imper- 


168  RIGHT  OF  PROPERTY.         ]PART.  II. 

fectly  acquainted.  I  merely  propose  to  give  a  passing 
glance  at  the  subject  with  the  view  of  ascertaining  the 
philosophy  on  which  criminal  laws  are  based. 

Penalties  and  punishments  are  the  means  usually 
relied  on  by  society  for  the  protection  of  property  from 
stealth,  violence,  and  fraud,  as  well  as  for  the  protection 
of  all  other  rights.  This  seems  to  be  the  only  practica- 
ble remedy  in  all  cases  wherein  the  social  prerogative  is 
not  competent  to  reach  and  suppress  the  causes  of 
trespasses.  But  wherever  government  has  the  power 
to  control  the  cause  of  crime,  and,  by  suppressing  that, 
to  prevent  its  commission,  this  expedient  should  be  em- 
ployed in  preference  to  penalties  and  punishments,  be- 
cause it  screens  society  from  the  mischievous  consequences 
of  the  offence  as  well  as  of  the  punishment,  all  of  which  it 
must  endure  under  the  expedient  last  named.  We  have 
seen  how  the  preventive  remedy  might  be  successfully 
applied  to  crimes  superinduced  by  alcohol ;  namely,  by 
interdicting  the  production  and  sale  of  that  fruitful 
instrument  of  mischief.  And  the  same  effective  method 
may  be  adopted  in  all  cases  in  which  the  remote  cause 
of  trespasses  is  known  to  reside  in  property,  or  indeed 
any  where  else,  provided  its  nature  and  circumstances 
are  such  that  the  laws  of  society  can  be  made  to  reach 
and  control  it.  But  where  crimes  have  their  origin  in 
the  constitution  of  human  nature, — where  they  are 
directly  prompted  by  ignorance,  or  passion,  or  by 
innate  depravity,  the  preventive  remedy  cannot  be  ap- 
plied with  equal  directness  and  certainty.  Much,  how- 
ever, may  be  accomplished  even  in  those  cases,  by  pro- 
moting intellectual  and  moral  culture,  which  maybe  term- 
ed the  indirect  method  of  prevention.  Ignorance  must 
be  regarded  as  the  principal  cause  of  all  vicious  ac- 
tions except  those  which  result  from  the  outbreaks  of 


GHAP.   II.]  RIGHT    OF    PROPERTY.  169 

passion  and  the  insubordination   of  desires  ;    because, 
minds    enlightened   by  a  knowledge  of  the  truth,  read- 
ily perceive  that  vicious  actions  produce  misery,  that 
the  practice  of  virtue  is  the  best  means  of  securing  hap- 
piness ;  and  I  hold  it  to  be  self-evident  that  the  judgment 
invariably  dictates  in  obedience  to  the  promptings  of 
that  supreme  desire.     Ignorance,  therefore,  is  a  fruitful 
source  of  crime,  and  being  so,  it  is  incumbent  on  society 
to  diminish  it  by  all  the  instrumentalities  at  its  command. 
The  subject  is  universally   regarded  in  this   light,   as 
may  be  inferred  from  the  fact  that  all  governments  foster 
and  encourage  education,  by  appropriating  less  or  more 
of  revenue  to  its  support,  to  say  nothing  of  other  expe- 
dients designed  to  promote  the  acquisition  of  knowledge. 
Some  governments  go  much  farther  than  others  in  the 
performance  of  this  duty ;  but  it  appears  to  me  that  the 
boldest  and  the  best,  among  which   may  be  reckoned 
some  of  our  state  governments,  have  stopped  far  short  of 
the  true  policy.     The  State  of  New  York,  which,  it  is 
believed,  may  justly  claim  pre-eminence  in  this  regard, 
has  placed  within  the  reach  of  every   child  within  her 
limits,  the  means  of  obtaining  what  is  called  a  common 
school   education.     At  this  point  she   stops  ;  her  efforts 
do  not  go  beyond  it.     Now,  if,  in  addition  to  this,  she 
should  place  within  the  reach  of  her  children,  the  means 
of  obtaining  a  general   outline    of  the  scientific  know- 
ledge of  our  times ;  and,  after  having  thus  enlarged  the 
proffered   mental   aliment,    she   should  then   (by  penal 
laws  aimed  at  neglectful  parents  and  guardians)  com- 
pel  them   to   partake   of   it,    or   of    other   aliment  of 
like  character,  I  am  persuaded  the  utility  of  her  system 
would  be  vastly  increased.     As  a  general  rule,  study 
and  mental  discipline  are  not  agreeable  employments  in 
the  estimation  of  children.     They  are  incapable  of  ap* 
15* 


170  RIGHT    OF   PROPERTY.  [PART.    II. 

predating  the  advantages  of  knowledge,  and  parents  are 
often  neglectful.  For  these  reasons,  a  large  share  of 
the  advantages  which  might  be  derived  from  systems  of 
public  education  are  lost  for  want  of  a  compulsary  clause. 
With  that  additional  feature,  much  of  ignorance  and 
its  mischievous  consequences  might  be  banished  from 
society. 

But  after  all  that  can  be  properly  done  by  society,  in 
the  prevention  of  trespasses,  by  the  direct  and  indirect 
methods  of  removing  or  lessening  their  causes,  many 
will  still  occur,  to  which  the  only  remedy  applica- 
ble is  the  direct  one  of  penalties  or  punishments.  It 
becomes  of  interest,  therefore,  to  understand  the  nature 
of  this  remedy,  and  to  inquire  as  to  its  proper  extent 
and  character.  Its  only  legitimate  aims  appear 
to  be,  to  compel  restitution  or  remuneration,  and 
to  prevent  .future  offences,  either  by  restraining  the 
perpetrator  or  by  deterring  others  from  the  commission 
of  like  offences.  In  regard  to  the  degree  of  pun- 
ishment necessary  to  secure  these  ends,  it  is  to  be 
remarked  that  experience  and  observation  are  the  only 
safe  guides.  There  is  one  rule,  however,  that  may  be 
safely  adopted,  namely,  to  shut  out  of  the  penal  code 
every  feature  and  sentiment  of  revenge.  When  we  con- 
sider that  man  is  the  involuntary  being  which  nature,  edu- 
cation and  association  have  made  him, — that  his  character 
is,  mainly  at  least,  formed  for  him  and  not  by  him — that  he 
is  in  a  great  measure  incapable  of  controlling  his  own  ac- 
tions,— we  must  perceive  the  impropriety  and  injustice  of 
permitting  punishments  to  be  tainted  with  the  spirit  of  re- 
venge. On  the  contrary,  the  nature  of  the  punishment 
should  partake  as  largely  of  mercy  as  the  safety  of  society 
will  warrant,  and  its  character  should  be  such  as  tends  to 
the  reformation  of  the  criminal.  The  present  tendency 


CHAP.    II. J  RIGHT    OF    PROPERTY.  171 

of  public  sentiment  on  this  subject,throughout  the  civilized 
world,  is  in  the  direction  of  mitigation.  It  has  already  in- 
fused more  of  mercy  in  the  penal  code  than  the  world  has 
hitherto  witnessed,  and  we  shall  soon  be  able,  by  observ- 
ing the  effects,  to  form  a  well  grounded  opinion  as  to  the 
propriety  of  the  change.  Thus  far  the  effects  seem  to 
have  been  salutary.  It  is  to  be  hoped  that  we  may  safe- 
ly advance  much  farther  in  the  same  direction ;  but  I 
have  my  fears.  It  seems  to  me  there  are  unmis- 
takable indications  that  a  much  greater  mitigation  of 
the  criminal  code  would  embolden  the  ignorant,  the  idle, 
the  vicious,  and  the  depraved,  to  disregard  all  rights, 
and  especially  the  right  of  property, — to  the  extent  per- 
haps of  demanding  an  equal  distribution  of  the  existing 
wealth.  I  regard  the  present  tendency  as  one  of  those 
vibratory  movements  to  which  all  things  in  nature  ap- 
pear to  be  subject.  The  penal  codes  were,  for  a  long 
period,  unnecessarily  severe  ;  that  undue  severity  caus- 
ed the  reaction  now  witnessed,  and,  whenever  the  rigors  of 
criminal  law  shall  become  so  far  relaxed  as  to  give  society 
a  foretaste  of  anarchy,  we  may  expect  another  reaction 
in  public  sentiment,  followed  by  increased  severity  of 
punishments.  Be  this,  however,  as  it  may,  there  is  one 
feature  of  deformity  in  criminal  jurisprudence  which  calls 
for  special  notice  and  condemnation.  I  refer  to  the  pro- 
digious difference  between  the  law  as  it  is  written,  and 
the  law  as  it  is  administered.  Penal  laws  are  not  en- 
forced with  sufficient  fidelity.  Either  the  legal  penal- 
ties are  too  severe,  or  public  sentiment  is  too  lenient,  for 
their  disparity  is  immense  in  all  countries,  and  especial- 
ly in  the  United  States.  Our  jurors  and  judges,  in  obe 
dience  to  their  own  notions  of  duty,  and  in  conformity 
with  public  sentiment,  usually  fritter  away  the  rigors  of 
the  law  and  the  force  of  testimony  to  such  a  degree 


172  RIGHT    OF    PROPERTY.  [PART.  II. 

that,  while  convictions  are  rare,  the  penalties  awarded 
are  of  the  mildest  grade  that  the  law  permits ;  and  even 
these  are  generally  remitted  by  those  entrusted  with  the 
pardoning  power.  It  were  far  better  that  the  law 
should  be  abolished,  or  its  letter  and  spirit  made  to  con- 
form to  public  sentiment,  than  to  thus  trifle  with  its 
provisions.  The  evil,  however,  if  it  be  one,  will  be 
likely  to  work  out  its  own  cure.  Experience  will  de- 
monstrate as  to  which  is  in  error — the  law  or  its  ad- 
ministrators— and  then  the  public  sentiment  will  make 
the  needful  correction. 

In  what  has  been  said  in  relation  to  the  enforcement 
of  rights,  it  will  be  seen  that  I  have  included  all  other 
rights  as  well  as  that  of  property.  All  legalized  rights, 
and  all  penal  enactments  for  enforcing  their  observance, 
being  designed  to  secure  a  common  end — the  promotion 
of  the  general  welfare  ;  and  the  different  divisions  being 
linked  together  by  reciprocal  influences,  it  was  believed 
that  a  passing  glance  at  the  whole  field  of  criminal  ju- 
risprudence would  be  the  surest  means  of  arriving  at  cor- 
rect conclusions  in  reference  to  laws  specially  designed  to 
enforce  the  right  of  property.  As  the  result  of  the  general 
but  imperfect  survey,  I  have  to  remark  that,  so  far  as  the 
enforcement  of  the  specific  right  under  consideration  is 
concerned,  I  have  no  explicit  emendation  to  suggest,  in 
the  existing  penal  laws  of  the  United  States.  Their  ef- 
fects prove  them  to  be  well  adapted  to  their  true  ends, 
since  they  not  only  render  the  property  over  which  they 
stand  guard,  at  least  as  secure  as  it  is  in  any  other 
country,  but  accomplish  that  end  by  milder  punish- 
ments than  can  be  found  in  the  practices  of  any 
other  nation  of  the  present  or  of  the  past.  For  these 
happy  results  we  are,  doubtless,  more  indebted  to  the 
favoring  tendencies  of  a  cheap  and  fertile  soil,  and  to  a 


CHAP.  II. J  RIGHT    OF    PROPERTY.  173 

republican  form  of  government,  than  to  the  peculiar 
mildness,  or  other  excellencies,  of  our  penal  codes  ;  but, 
since  the  general  result  is  favorable,  it  is  perhaps  the 
safest  course  to  follow  the  trite  adage,  and  leave  well 
enough  alone.  It  is  certain,  however,  that,  as  a  commu- 
nity, we  suffer  more  from  the  direct  injuries  produced  by 
offences  against  the  right  of  property,  than  by  those  which 
result  from  the  punishment  of  offenders, — in  other  words, 
that  we  are  nearer  anarchy  than  despotism  ;  from  which 
it  may  be  inferred  that  the  change  demanded  by  the 
public  good,  if  any,  is  an  augmentation  of  penalties  and 
punishments. 


175 


CHAPTER  3. 
OF  THE  INSTITUTION  AND  ENFORCEMENT  OF  THE  RIGHT 

OF    PROPERTY    IN    LAND. 

In  a  former  chapter  it  has  been  shown  that  land  does 
not  possess  real  value,  except  in  its  meliorations, — that 
the  utility  inherent  in  it  is  the  gift  of  nature,  and  not 
the  production  of  man  or  his  instrumentalities ;  that  the 
imperative  necessity  of  incorporating  value  with  the 
soil,  in  order  to  increase  its  fruitfulness,  induced  the 
more  enlightened  sections  of  the  human  family  to 
establish  and  enforce  the  right  of  private  ownership  ; 
that  this  has  been  accomplished  by  means  of  first 
transforming  a  natural  right,  common  to  each  individual, 
into  a  social  right,  and  afterwards  transferring  the  latter 
back  to  individuals,  in  definitive  portions  accompanied 
with  the  social  guaranty,  upon  the  payment  of  an  equi- 
valent. It  has  been  shown  also,  that  this  expedient  con- 
stitutes the  chief  corner  stone  of  social  wealth,  and  that 
it  is  fraught  with  extraordinary  powers  of  productive- 
ness,— that  it  is,  in  fact,  that  master  stroke  of  social  poli- 
cy, by  means  of  which,  more  than  by  all  other  instru- 
mentalities combined,  man  has  been  elevated  from  bar- 
barism to  civilization. 

But  notwithstanding  the  momentous  benefits  derived 
from  this  expedient,  there  are  many  who  regard  its 


176  RIGHT   OF   PROPERTY    IN    LAND.       [PART.    II. 

adoption  as  an  improper  assumption  of  social  power,  and 
the  right  which  it  confers,  as  illegitimate.  They 
maintain  that  the  appropriation  of  the  soil  is  unjust 
to  those  who  do  not  possess  any  portion  of  it,  and  espe- 
cially so  to  those  who,  upon  entering  the  arena  of  pro- 
duction, destitute  of  such  inheritance,  find  the  land 
already  monopolized  by  earlier  comers.  This  monopoly, 
it  is  averred,  violates  the  natural  rights  of  the  landless, 
because  it  excludes  them  from  a  participation  in  benefits 
which  nature  designed  as  a  free  gift  to  all.  A  few  words 
will  suffice  to  show  the  unsoundness  of  these  opinions, 
and  to  vindicate  the  policy  under  consideration. 

According  to  the  fundamental  rule  of  social  policy 
adopted  by  our  government — a  rule  which  I  have  endea- 
vored, in  the  two  preceding  chapters,  to  inculcate  as  the 
true  one,  and  which  is  briefly  expressed  in  the  republican 
maxim,  "  the  greatest  good  of  the  greatest  number" — 
the  right  of  property  in  land  is  clearly  legitimate,  be- 
cause it  is  universally  conceded  that  its  recognition  and 
enforcement  has  produced  more  of  benefits  than  of 
injuries:  the  relative  superiority  of  man's  condition 
wherever  it  exists,  as  compared  with  his  condition  in  its 
absence,  aifords  indisputable  evidence  of  this  fact.  But 
we  may  safely  go  farther,  and  affirm,  that  it  is  beneficial  to 
every  member  of  the  society  adapting  it — or  rather,  that 
it  operates  equally ,  and  places  within  the  reach  of  ally 
benefits  which  they  could  not  otherwise  compass.  If 
there  are  those  who  fail  to  partake  of  the  proffered  ad- 
vantages, the  fault  must  be  their  own,  since  the  policy 
presents  no  features  of  exclusiveness  or  inequality.  Its 
conditions  are  the  same  to  all. 

It  will  not  be  denied  that  the  members  of  a  community 
have  a  right  to  enter  into  whatever  contract  they  may 
choose,  with  the  view  of  bettering  their  social  condition, 


CHAP.  III.]         RIGHT    OF   PROPERTY    IN    LAND.  177 

provided  its  enforcement  inflicts  no  wrong  on  any  por- 
tion of  themselves,  nor  on  the  members  of  other  commu- 
nities. Now  let  us  examine  the  agreement  under  con- 
sideration, and  see  whether  its  stipulations  do  not  con- 
form to  even  this  illiberal  rule.  The  contracting  parties 
are  possessed  of  a  right,  common  to  each,  to  partake  of 
the  utility  derivable  from  the  soil.  They  mutually  agree 
to  surrender  to  the  mass  that  common  right,  and  to 
accept  in  its  stead,  the  exclusive  right  to  definitive  por- 
tions,— subject,  however,  to  this  condition :  that  the  ex- 
clusive right  shall  not  be  conferred  in  any  case  without 
the  payment  of  an  equivalent,  or  other  uniform  consider- 
ation stipulated  in  the  contract.  Taking  the  procedure 
of  the  United  States  in  reference  to  this  subject,  as  the 
type  of  the  agreement  by  which  the  right  of  property  in 
land  has  been  established,  this  is  the  length  and  breadth 
of  its  provisions.  Examine  the  subject  in  whatever 
aspect  we  may,  these  are  the  only  essential  features  it 
presents.  There  is  surely  no  injustice  perpetrated  here. 
Every  member  of  the  community  is  placed  upon  an 
equal  footing.  All  the  provisions  of  the  contract  come 
within  the  limits  of  that  absurdly  stringent  rule  of  social 
policy,  which  requires  the  body  politic  to  refrain  from  the 
assumption  of  prerogatives,  in  the  exercise  of  which, 
wrong  or  injury  is  inflicted  on  any  portion  of  its  mem- 
bers. An  equal  per  capita  division  of  the  soil  (if  such 
a  plan  were  practicable,  which  it  is  not)  could  not  be 
more  equitable, — indeed  it  would  be  less  so,  as  may  be 
readily  shown. 

It  is  well  known  that  some  occupations  require  the 
concurrent  service  ot  more  land  than  others  do.  The 
processes  of  agriculture,  for  example,  require  more 
than  those  of  mining,  commerce,  or  the  manufacturing 
arts  ;  and  yet,  the  productive  service  of  the  smaller  quan- 
16 


178  RIGHT    OF    PROPERTY    IN    LAND.  [PART    II. 

tity  is  worth  as  much  to  those  who  prosecute  the  latter 
as  the  larger  quantity  is  to  cultivators  of  the  soil.  Wher- 
ever commerce  or  the  manufacturing  arts,  in  obedience  to 
the  invitations  of  favoring  locality  and  other  natural  advan- 
tages, select  their  theatres  of  action,  there  the  market 
value  of  a  building  lot,  and  the  net  revenue  derived  from 
it,  are  equal  to  the  market  value  and  the  net  revenue  of 
many  acres  of  land  appropriated  to  agriculture.  These 
indeterminate  but  uniform  principles  are  known  to  every 
one  from  observation  ;  and  in  my  attempt  to  unfold  the 
natural  laws  of  trade,  I  have  proved,  it  is  hoped,  that  the 
following  definite  principles  obtain :  namely,  that  capital  is 
everywhere  proportionate  to  population,  and  that  the  mar- 
ket value  of  land  is  the  counterpart  of  the  capital  placed 
upon  it  and  concurring  with  it  in  production ;  from  which 
it  follows,  that,  when  estimated  in  the  mean,  the  market 
value  of  single  building  lots  of  ground  appropriated  to 
commerce,  or  to  the  arts,  and  thus  employed  productively 
by  individuals,  is  precisely  equal  to  the  market  value 
(of  the  land  independent  of  meliorations)  of  single  farms 
appropriated  to  agriculture  ;  and  if  their  respective  mar- 
ket values  are  equal,  it  follows  that  the  net  revenue,  or  the 
value  of  the  productive  service  derived  from  each,  must 
be  equal  also. 

We  find,  then,  that  nature  has  variously  endowed  the 
soil,  having  conferred  on  some  localities  productive  pro- 
perties which  invite  the  co-operation  of  the  miner,  on 
others,  those  which  attract  the  merchant  or  the  manu- 
facturer, and  on  others,  qualities  esteemed  by  the  hus- 
bandman— to  say  nothing  of  the  relative  difference  in 
productive  powers,  between  different  localities  of  the 
same  class.  We  find,  also,  that  the  miner,  the  mer- 
chant, the  manufacturer  and  the  artizan,  respectively 
require,  for  the  profitable  employment  of  their  industry 


CHAP.    III.]       RIGHT    OF    PROPERTY    IN    LAND.  179 

and  capital,  the  concurrence  of  a  much  smaller  quantity 
of  land  than  is  needed  by  the  agriculturist — probably 
not  more  than  the  one  thousandth  part ;  and  the  service 
of  the  larger  quantity  is  worth  no  more  to  the  last  named 
than  that  of  the  smaller  quantity  is  to  either  of  the 
others.  In  view  of  these  facts,  how  manifest  the  injus- 
tice and  unfairness  of  an  equal  division  of  the  soil.  If 
that  system  should  be  adopted  by  a  state  in  which  the 
industry  and  capital  were  sufficient  to  employ  produc- 
tively the  whole  of  the  land,  it  is  obvious  that  cultiva- 
tors of  the  soil  would  receive  much  less  than  their  occu- 
pation required,  whilst  all  others  would  receive  a  super- 
abundance, for  the  use  of  which  they  would  compel  the 
former  to  pay  them  tribute.  And  in  case  population  were 
sparse  and  lands  redundant,  as,  for  instance,  in  the  United 
States,  the  injustice  towards  the  agricultural  interest 
would  be  the  same,  because  the  adoption  of  this  system 
would  either  force  a  portion  of  the  cultivators  into  the 
wilderness,  remote  from  a  market,  and  thus  deprive  them 
of  the  benefits  derivable  from  commerce  and  the  arts,  or 
else  compel  them  to  forego  their  portions,  and  to  pay 
tribute  to  the  other  interests. 

The  objections  just  urged  against  an  equal  division  of 
the  soil,  on  grounds  of  equity,  will  not  apply  to  the 
existing  system.  They  are  completely  obviated  by  that 
provision  in  the  land  agreement,  which  requires  the  pay- 
ment of  an  equivalent  for  the  exclusive  right,  whenever 
it  is  conferred.  All  individuals,  and  all  interests,  are 
thus  placed  on  an  equal  footing.  If  the  locality  be 
adapted  to  commerce  or  the  arts,  the  equivalent  will  be 
relatively  high — the  better  the  adaptation,  the  higher ; 
if  to  agriculture  only,  it  will  be  relatively  low — the 
less  fertile  the  soil,  the  lower ;  and,  in  every  case,  the 
equivalent  paid,  goes  to  the  common  fund.  The  simplest 


180  RTGHT    OF    PROPERTY    IN    LAND.          [PART    II. 

and  most  certain  rule  for  determining  the  true  money 
equivalent  of  any  given  section  or  parcel  of  the  national 
domain  is,  to  sell  it  at  public  sale  to  the  highest  bidder. 
The  system  of  equivalents,  and  this  rule  for  determining 
them,  have  been  adopted  by  the  government  of  the 
United  States,  with  which,  however,  it  has  skilfully 
combined  the  feature  of  a  stipulated  consideration,  by 
establishing  a  minimum  price,  below  which,  no  portion  of 
the  public  lands  can  be  sold,  either  by  auction  or  at 
private  sale.  For  example  :  when  surveyed  and  brought 
into  market,  the  lands  are  first  offered  at  public  sale, 
subject  to  that  limitation  ;  the  more  valuable  sections 
find  purchasers,  some  above,  and  others  at,  the  minimum 
price ;  the  less  valuable  remain  subject  to  entry  at  that 
rate ;  and  whenever  the  swelling  tide  of  industry  and 
capital  has  approached  sufficiently  near  to  render  this 
price  the  true  money  equivalent  of  such  sections  as 
remain,  then  these  find  purchasers  also.  Thus,  by 
means  of  this  admirably  devised  plan,  the  right  of  pro- 
perty in  land  is  conferred  on  individuals  at  relative 
prices  exactly  corresponding  with  the  relative  value  of 
the  respective  parcels  or  sections  at  the  time  of  convey- 
ance. But  we  have  yet  to  enquire  whether  the  absolute 
price  agrees  with  the  absolute  value.  In  the  purchase 
of  public  lands,  all  individuals  are  placed  upon  an  equal 
footing, — each  pays,  according  to  a  given  ratio,  in  pro- 
portion to  the  value  received ;  but  it  may  be  that  all  pay 
either  too  much  or  too  little.  This  question  we  will 
briefly  examine. 

We  have  seen  that  land  does  not  possess  real  value, 
and  that  its  market  value  in  the  reflection  or  counterpart 
of  the  capital  either  placed  upon  it,  or  standing  ready 
to  concur  with  it  in  production.  From  these  facts  it 
might  be  inferred  that  the  true  equivalent  of  the  value 


CHAP.    III.]       RIGHT    OF    PROPERTY  IN    LAND.  181 

of  unappropriated  lands,  is,  just  nothing  at  all, — in 
other  words,  that  the  exclusive  right  should  be  conferred 
on  individuals  without  consideration  or  price ;  and  the 
inference  would  be  legitimate,  were  it  not  for  the  fact 
that  government  is  compelled  to  expend  on  the  land,  less 
or  more  of  capital,  in  order  to  render  itself  competent 
to  furnish  to  individuals  perfect  titles.  This  fact  destroys 
the  validity  of  the  inference.  Government,  for  example, 
must  extinguish  all  pre-existing  titles  ;  it  must  have  the 
lands  surveyed,  and  carefully  marked  off  into  sections 
and  lots  ;  it  must  execute  the  title  deeds,  and  preserve  a 
record  of  them ;  it  must  perform  all  these  acts,  and 
incur  the  expenses  incident  thereto,  before  it  can  be  in 
a  position  to  furnish  perfect  titles.  For  these  outlays  it 
is  clearly  entitled  to  remuneration,  but  to  nothing  more. 
Government  may  be  regarded  as  the  trustee  in  this  mat- 
ter ; — it  holds  the  public  lands  in  trust  for  the  benefit  of 
the  citizens,  and,  in  making  the  distribution,  it  should 
receive  a  consideration  sufficient  to  defray  the  expenses 
of  the  trust.  The  expenses  referred  to,  are  incident  to 
the  establishment  of  the  right  of  property  in  land. 
There  are  others  growing  out  of  its  enforcement,  but  it 
is  alike  customary  and  proper  to  defray  these  by  means 
of  taxation. 

We  find,  therefore,  that  the  absolute  value  of  .the 
national  domain  is,  the  cost  incident  to  the  social  trus- 
teeship ;  that  the  prices  of  the  different  sections  should 
correspond  with  the  relative  value  of  each  j  and  that  the 
aggregate  price  should  be  equal  to  the  aggregate  expen- 
diture. Now,  upon  examining  the  results  of  the  pub- 
lic land  policy  of  the  United  States,  we  find  that  it 
conforms  to  these  just  principles.  Whether  this  con- 
formity should  be  regarded  as  a  fortunate  accident,  or  as 
the  result  of  enlightened  economic  views  on  the  part  of 
16* 


182  RIGHT    OF    PROPERTY    IN    LAND.          [PART    II. 

those  who  framed  the  policy,  I  are  not  prepared  to  say, 
nor  is  it  material.  It  is  sufficient  to  know  that  the 
existing  land  policy  of  our  government  is  just  and  wise. 
But  if,  as  we  are  bound  to  suppose,  the  authors  of  this  poli- 
cy adopted  it  with  the  design  of  causing  the  aggregate  re- 
ceipts to  equal  the  aggregate  expenditure,  because  they 
knew  that  the  latter  constitutes  the  true  and  only  value  of 
the  public  lands,  then  we  cannot  but  admire  the  extraor- 
dinary skill  displayed  by  them,  in  so  framing  it  as  to  pro- 
duce this  result,  without  departing  from  the  principle  of 
selling  the  different  sections  and  lots  at  prices  correspond- 
ing with  their  respective  values.  The  extreme  difficulty 
of  devising  a  system  capable  of  combining  and  carrying 
out  these  two  principles,  will  appear  from  what  follows. 
The  absolute  price  of  the  public  lands  might  be  made 
to  coincide  with  their  absolute  value  in  the  aggregate,  by 
establishing  a  uniform  price  per  acre.  But  that  system 
would  not  combine  the  principle  of  selling  each  section 
at  its  relative  value,  because  it  puts  all  classes  of  land 
— the  mineral,  the  commercial,  the  manufacturing  and 
the  agricultural,  between  each  of  which,  there  is  a  wider 
difference  in  value — and  all  qualities  of  each,  at  the 
same  price.  The  relative  price  would  be  made  to  agree 
with  the  relative  value,  by  the  simple  expedient  of  selling 
all  the  public  lands  by  auction,  to  the  highest  bidder, 
without  limitation  or  reservation.  But  this  system  would 
fail  to  produce  a  correspondence  between  the  aggregate 
expenditure  and  the  aggregate  receipts,  because,  in  this 
case,  the  absolute  price  of  each  section  would  depend  on 
the  quantity  thrown  upon  the  market.  The  market 
price  of  land,  like  every  other  commodity,  IB  governed 
by  supply  and  demand ;  and,  while  supply  and  demand, 
in  relation  to  all  other  commodities,  are  so  ruled  by  self- 
interest  and  the  desire  of  happiness,  as  to  cause  the 


CHAP.    III.]       RIGHT     OF    PROPERTY    IN    LAND.  183 

average  market  price  to  coincide  with  the  true  value,  the 
supply  of  unappropriated  land  is  dependent  upon  the 
will  or  caprice  of  the  government,  it  being  the  sole  pro- 
prietor. Being  possessed  of  this  monopoly,  it  has  the 
power  of  elevating  the  price  by  withholding  the  supply, 
or  of  depressing  it  by  crowding  its  lands  upon  the  mar- 
ket. Therefore,  neither  system  will  combine  and  carry 
out  both  principles.  But,  by  a  skilful  combination  of 
the  two  methods,  and  by  establishing  the  appropriate 
minimum  price,  this  end  has  been  attained  by  our  govern- 
ment, and  it  has  thus  succeeded  in  devising  and  adopting 
the  true  policy.  This  policy  cannot  be  departed  from, 
nor  could  any  other  have  been  established  in  the  first 
instance,  without  doing  violence  to  the  principle  of 
justice.  We  have  already  seen  that  it  cannot,  inequity, 
depart  from  the  principle  of  relative  value ;  and  we  will 
now  proceed  to  show  that  its  conformity  with  the  princi- 
ple of  absolute  value  is  equally  essential. 

In  the  first  place,  it  is  to  be  observed,  that  the  injus- 
tice consequent  upon  commencing  wrong,  is  not  so  direct 
and  apparent,  nor  is  it  equal  in  degree,  to  that  perpetra- 
ted by  changing  from  the  true  policy  to  a  false  one.  In 
illustration  of  the  mischievous  consequences  of  a  wrong 
beginning,  let  us  suppose  an  infant  State  to  adopt  the 
policy  of  charging  its  individual  members  100  per  cent, 
profit  on  land,  instead  of  selling  at  cost  and  charges. 
What  would  be  the  consequences  of  this  policy  ?  How 
would  it  affect  the  rights  and  interests  of  the  individual 
members,  or  of  the  different  industrial  classes?  The 
only  legitimate  disposition  that  could  be  made  of  the 
profits,  would  be,  either  to  apply  them  in  payment  of 
expenses  incident  to  the  performance  of  other  govern- 
mental duties,  or  to  distribute  them  amongst  the  mem- 
bers of  the  community.  In  either  case,  this  policy 


184  RIGHT    OF    PROPERTY    IN    LAND.         [PART    II. 

would  seem  to  extort  tribute  from  the  purchasers  of  land 
for  the  benefit  of  the  whole  community — to  tax  a  part 
for  the  benefit  of  the  whole.  Such  is  not  the  conse- 
quence however ;  the  injustice  is  only  apparent.  We  have 
seen  that  the  natural  laws  of  trade  produce  an  ultimate 
uniformity  in  the  rate  of  profit  in  all  departments  of  pro- 
duction, however  numerous  or  violent  the  disturbing  influ- 
ences may  be ;  and  that  the  same  laws  award  to  the  proprie- 
tors of  land,  one  quarter  of  the  aggregate  profit,  regard- 
less of  the  relative  quantity  of  land  employed.  Now,  it 
is  obvious,  that  the  higher  the  price  demanded  for  unap- 
propriated land,  the  smaller  will  be  the  quantity  pur- 
chased, and  made  to  concur  in  the  processes  of  produc- 
tion ;  because,  in  the  first  place,  the  higher  the  price, 
the  smaller  the  number  possessing  the  means  of  pur- 
chase, and  in  the  next  place,  the  higher  the  price, 
the  smaller  must  be  the  quantity  employed,  in  order 
to  maintain  the  equilibrium  of  profits.  Therefore, 
in  the  case  supposed,  the  profits  charged  by  govern- 
ment, in  the  sale  of  unappropriated  land,  would  first 
diminish  the  quantity  which  would  otherwise  be  produc- 
tively employed;  this  diminution  would  enhance  the 
market  value  of  the  services  of  the  land  brought  into 
employment,  by  which  means,  the  purchasers  thereof 
would  be  remunerated  for  the  tribute  paid  to  govern- 
ment, and  the  equilibrium  of  profits  maintained.  The 
erroneous  policy  under  consideration,  does  not,  therefore, 
violate  the  right  of  individuals,  nor  of  classes :  it  oper- 
ates on  all  alike,  and  leaves  their  relative  condition  the 
same.  But,  by  placing  an  unnecessary,  and  therefore 
an  unjust  barrier,  between  industry  and  capital  on  the 
one  side,  and  unappropriated  land  on  the  other,  it 
mars  the  prosperity  of  the  whole.  It  lessens,  as  we 
have  just  seen,  the  quantity  of  land  productively  em- 


CHAP.   m.J      KIGHT  oi^  rnorEiiTY   m  LAND.  185 

ployed  ;  it  withholds  from  industry  and  capital  a  portion 
of  the  land  with  which  their  productive  powers  are  capable 
of  concurring  ;  it  thus  partially  seals  up,  for  a  time,  the 
fountain  of  natural  wealth,  causing  its  stream  of  produc- 
tive service  to  flow  with  less  fullness  and  vigor  than  nature 
designed,  and  thereby  diminishes  the  aggregate  produc- 
tion of  wealth,  and  lowers  the  standard  of  profits.  This 
is  the  only  mischievous  consequence,  provided  the  profits 
received  by  government  are  applied  in  liquidation  of 
other  necessary  expenditures  of  the  state ;  but  if  the 
profits  are  distributed,  then  we  should  add  to  the  evil 
just  pointed  out,  the  pecuniary  loss  incident  to,  and  the 
corruption  engendered  by  their  collection  and  re-distri- 
bution. 

Should  an  infant  State  commit  the  opposite  error  of 
establishing  the  .prices  of  unappropriated  lands  below  the 
natural  or  true  value,  these  consequences  would  not,  of 
course,  ensue ;  but  it  would  thereby  expose  itself  to 
others,  perhaps  equally  injurious.  The  prices,  or  the 
mean  price,  could  not  be  established  much  below  the 
cost  of  producing  perfect  titles  without  abandoning  the 
principle  of  relative  value,  which,  as  we  have  seen,  can- 
not be  done  without  disregarding  the  plainest  dictates  of 
justice.  The  establishment  of  a  low  minimum  would, 
however,  produce  a  mean  price  below  the  mean  cost, 
without  departing  from  the  rule  of  selling  the  different 
parcels  at  prices  proportionate  to  the  value  of  each. 
Assuming  the  erroneous  policy  not  to  transcend  these 
limits,  what  would  be  its  consequences  1  It  could  not  be 
productive  of  benefits,  since  what  individuals  gained  by 
the  low  price,  the  state  would  loose.  That  loss  the 
state  would  be  compelled  to  make  good  by  taxation ; 
and  since  the  natural  laws  of  trade  make  an  equal 
distribution  of  the  benefits,  and  of  the  burdens,  award- 


186  RlttHT  OTT  PROPF.RTY     TN    T.AND.          [PART    II. 

ing  to  every  individual  equal  portions  of  each,  it  follows 
that  no  one  would  gain,  but,  on  the  contrary,  there  would 
be  an  aggregate  loss  equal  to  the  expenses  incurred 
in  the  collection  of  the  taxes  necessary  to  make  good  the 
loss  on  laud.  To  the  extent  of  that  loss,  the  policy 
under  consideration  would  prove  injurious  to  the  politi- 
cal society  adopting  it.  It  would  also  be  productive  of 
another  mischievous  consequence  far  more  detrimental  to 
the  general  welfare.  By  establishing  the  prices  of  public 
lands  below  their  true  value,  it  would  cause  an  unnatural 
dispersion  of  population,  and  thus  diminish  the  benefits 
derivable  from  commerce  and  the  arts,  and  from  associa- 
ted efforts. 

Such  are  the  evils  consequent  upon  the  policy  of  sel- 
ling the  public  lands,  either  above  or  below  their  true 
value,  when  adopted  and  persisted  in  from  the  beginning. 
The  act  of  changing  from  the  true  policy  to  a  false  one, 
is  not  only  productive  of  similar  consequences,  but  liable 
to  another  objection  of  a  more  direct  and  serious  kind  ; 
namely,  it  benefits  one  class  at  the  expense  of  another. 
Let  our  government,  for  example,  change  the  minimum 
price  from  lTYo  to  2TW  per  acre,  thereby  enhancing  the 
price  of  all  public  lands  one  hundred  per  cent. — What 
would  be  the  effects  of  the  change  on  existing  interests  1  It 
could  not  fail  to  enhance,  and  that  promptly,  the  market 
value  of  all  lands  owned  by  individuals,  to  the  same 
extent — namely,  $1T\\  per  acre,  for  the  poorest  quality, 
and  in  that  proportion  for  the  better  qualities.  As,  for 
example,  when  the  law  gives  to  an  individual  or  corpor- 
ate body,  the  exclusive  privilege  of  producing  any  given 
article  of  wealth,  the  market  value  of  the  existing  supply 
of  that  article  at  once  conforms  to  the  arbitrary  price 
established  by  the  monopolist,  and  for  the  obvious  rea- 
son, that  purchasers  will  take  the  one  and  leave  the  other. 


CHAP  III.]         RIGHT    OF    PROPERTY    IN    LAND.  187 

so  long  as  there  is  a  perceptible   difference   in  favor  of 
either.     And  it  is  precisely  thus  in  relation  to  the  market 
price  of  lands.     Government  possesses  the  monopoly, — 
it  is  invested  with  the  exclusive  privilege  of  furnishing 
new  lands  to  meet  the  augmentation  of  demand ;  conse- 
quently, when  government  raises  the  price  of  fresh  sup- 
plies, the  demand  is  thereby  concentrated  on  the  existing 
supply,  and  thus  the  market  value  of  private   lands  is 
forthwith  expanded,  and  made  to  conform  to  the  arbitrary 
standard  established  by  the  government  valuation.     It  is 
clear,  therefore,  that  the  change  referred  to,  must  inevita- 
bly produce  the  effect   stated,  namely,  a  corresponding 
enhancement  in  the   price   of  all  private   lands.     We 
might  now  advance  a  step,  and  proceed  to  deduce  the 
first   consequences  of  this  effect,  then  move  onward  to 
the  next  link  in  the  series,  and  so  on,  until  all  the  impor- 
tant consequences  of  the  measure  were  traced  out ;  but 
since  the  argument  would  be  similar  to  others  already 
advanced,  it  is  not  deemed  necessary  to  present  it.     I 
shall  therefore  merely  state  the  ulterior  consequences, 
and  refer  to  the  chapter  on  the  Natural  Laws  of  Trade 
for  evidence  of  their  soundness. 

The  first  effect  of  the  enhancement  of  the  market 
value  of  private  lands  (by  the  means  referred  to)  would 
be  to  enrich  the  proprietors  of  land,  to  the  extent  of  the 
enhancement,  and,  in  the  same  degree,  to  impoverish  the 
proprietors  of  industry  and  of  productive  capital.  The 
next  consequences  would  be  to  diminish  the  relative  quan- 
tity of  land  productively  employed,  and  to  augment  the 
revenue  of  a  given  quantity  of  it ;  to  lessen  the  rewards 
of  industry  and  the  profits  of  capital,  and,  at  the  same 
time,  to  retard  the  increase  of  both.  And  the  ultimate 
economic  consequence  would  be,  to  lower  the  national 
standard  of  profits.  Therefore,  our  government  could 


188        RIGHT  OF  PROPERTY  IN  LAND.    [PART.  II. 

not  enhance  the  present  price  of  public  lands  without 
rendering  itself  liable  to  the  double  charge  of  injustice 
and  folly.  The  injustice  of  the  measure  would  consist 
in  an  arbitrary  transfer  of  a  portion  of  the  wealth  of  the 
landless  to  land-owners, — its  folly,  in  lowering  the 
standard  of  profits,  diminishing  the  aggregate  of  wealth, 
and  thereby  impairing  the  general  prosperity. 

Should  a  change  take  place  in  the  opposite  direction, 
(which,  it  may  be  remarked,  there  is  far  more  reason  to  ap- 
prehend,) the  consequences  would  be  no  less  in  conflict  with 
the  principles  of  justice.  To  reduce  the  price  of 
government  lands,  would  lessen  in  an  equal  degree,  the 
market  value  of  all  other  lands,  and  thereby  impoverish 
the  proprietors  of  land  and  enrich  the  proprietors  of 
industry  and  capital.  This  measure  is  also  liable  to  the 
objections,  that  its  adoption  would  render  necessary 
increased  taxation  with  its  attendant  evils,  and  that  it 
would  still  farther  disperse  our  already  scattered  popula- 
tion. 

From  the  foregoing  considerations,  we  derive  the  follow- 
ing general  conclusions,  namely :  That  society  has  not 
trespassed  on  the  rights  of  any  one  of  its  members,  in 
establishing  the  right  of  property  in  land ;  that  the  con- 
tract by  which  it  has  been  accomplished,  (taking  the 
existing  land  system  of  the  United  States  as  the  model  or 
standard)  conforms  to  the  principles  of  justice,  and  to 
the  maxim  of  political  equality ;  and  that  the  policy  is 
dictated  by  true  wisdom,  since  it  is  fraught  with  momen- 
tous benefits  to  all  who  choose  to  partake  of  them,  and 
is  unproductive  of  injury  to  any. 

Therefore,  if  the  policy  is  liable  to  well  founded  objec- 
tions, they  must  be  urged,  not  against  the  right  to  ac- 
quire and  to  hold  landed  property,  but  against  that  other 
feature  of  the  agreement,  which  establishes  the  right  of 


CHAP.    III.]        RIGHT   OF   PROPERTY    IN   LAND.  189 

bequest  and  inheritance.  This  feature  is  quite  distinct 
from  the  former,  and  if  it  should  be  found  obnoxious  to 
the  charge  of  injustice,  or  of  folly,  it  might  be  abrogated 
without  disturbing  the  other  provisions  of  the  contract. 
But  I  apprehend  that  the  right  to  convey,  bequeath  and 
inherit,  will  be  found  as  free  from  valid  objections,  and 
as  conducive  to  the  well-being  of  society,  as  the  right  to 
acquire  and  hold. 

We  have  seen  that  the  right  of  property  in  land  is  no 
less  legitimate,  while  it  is  more  productive  of  benefits,  than 
the  right  of  property  in  capital,  or  in  the  products  of 
industry  and  capital ;  and  it  is  known  that  capital  and 
land  are  in  many  cases  so  intimately  blended  as  to  be 
inseparable.  Therefore,  if  the  right  of  bequest  and 
inheritance  be  abolished  in  the  one  case,  it  must  neces- 
sarily be  abolished  in  the  others  also.  In  that  event,  all 
private  property,  upon  the  death  of  its  respective  owners, 
would  become  public  property,  subject  to  the  guardian- 
ship of  the  State,  where  it  would  be  either  consumed  by 
the  hungry  cormorants  in  office  or  distributed  amongst 
the  members  of  the  community.  At]least  this'would  be  the 
best  policy  that  could  be  adopted  under  the  circumstances, 
since  the  only  alternative  presented  would  be  the  aban- 
donment of  property  left  without  a  legal  owner,  to  indis- 
criminate and  unrestrained  plunder.  But  whatever 
might  be  the  policy  adopted,  in  substitution  of  the  right 
to  bequeath  and  inherit,  it  needs  no  argument  to  prove 
that  property  would  vanish  like  dew  before  the  sun. 
The  social  recognition  and  guaranty  of  that  right  is  one 
of  the  indispensable  supports  of  social  wealth.  Remove  it, 
and  the  immense  fabric  will  fall  to  the  ground.  Abolish 
the  right  to  bequeath,  and  you  take  away  the  strongest 
incentive  to  the  acquisition  and  preservation  of  wealth  : 
you  relax  the  springs  of  Industry  by  destroying  its  strong- 

17 


190  RIGHT    OF    PROPERTY    IN    LAND.  [PART  II, 

est  motive  of  action,  and  by  awakening  the  expectation 
of  social  contributions  ;  and  you  sharpen  the  teeth  of 
com  sumption,  and  unchain  its  appetite,  by  completely 
unnerving  its  antagonist,  economy.  In  a  word,  you  first 
seal  up  the  fountains  of  wealth,  and  then  invite  the  speedy 
consumption  of  their  existing  products. 

It  is  deemed  unnecessary  to  say  more  in  vindication  of 
this  section  of  the  right  of  property  in  land.  Its  wisdom 
or  utility,  as  evinced  by  its  fruits,  is  second  only  to  that  of 
the  other  section  of  the  same  right ;  and  its  freedom  from 
mischievous  properties,  as  well  as  its  conformity  with  the 
principle  of  political  equality,  may  be  inferred  from  the 
considerations  advanced  in  reference  to  the  right  to  acquire 
and  hold  landed  property.  It  is  believed  to  be  entirely 
free  from  valid  objections  of  any  character  whatever. 
But  if  the  fact  be  otherwise,  if  the  right  to  bequeath  and 
inherit  land  is  productive  of  injuries  of  any  kind,  they 
are  too  trifling  to  be  perceived  in  presence  of  its  rich  and 
abounding  advantages.  Nevertheless,  it  has  been  found 
necessary  in  this  instance,  as  it  has  in  the  establishment 
of  most  other  legal  rights,  to  confine  its  exercise  within 
prescribed  limits.  Different  states,  in  founding  the 
right  of  bequest,  have  given  to  it  different  boundaries  ; 
but  it  is  believed  that  all  have  either  qualified  or  excluded 
primogeniture  and  entailment.  In  view  of  the  proneness 
of  richly  endowed  heirs  to  sacrifice  their  patrimonies  at 
the  shrine  of  luxury  or  of  vice,  wealthy  testators  have 
ever  been  desirous  of  adopting  that  expedient,  as  a  means 
of  securing  to  their  posterity  the  full  benefits  of  their 
bequests.  This  desire  is  natural,  and  even  laudable ;  but 
society  has  deemed  its  unrestrained  gratification  incom- 
patible with  the  public  good.  Governments  have  accord- 
ingly interposed  restraints,  and  we  are  now  to  inquire 
whether  they  have  been  moved  thereto  by  good  and  suffi- 
cient reasons. 


CHAP.    III.]        RIGHT    OF   PROPERTY    IN    LAND.  191 

By  the  terms  primogeniture  and  entailment,  I  mean 
the  bequest  of  landed  estates  to  the  eldest  son  and  his 
heirs  forever,  which  of  course  confers  on  each  recipient 
nothing  more  than  the  right  of  use,  or  what  is  usually 
termed  a  life-estate.  Bequests  of  this  character,  there- 
fore, virtually  destroy  the  right  of  property  in  land. 
The  testator  loans  his  estate,  first  to  A  during  his  life- 
time, then  to  B  for  the  same  term,  then  to  C,  and  so  on 
in  perpetuity ;  but  the  absolute  right  of  property  therein, 
dies  when  he  dies,  and  is  buried  with  him.  Thus  the 
dead  are  the  owners,  the  living  mere  tenants.  When 
viewed  in  this  light,  the  act  of  simple  entailment  chal- 
lenges the  condemnation  rather  than  the  favor  of  society ; 
and  when  we  reflect  that  the  impossibility  of  dividing 
and  sub-dividing  estates  amongst  all  the  descendants, 
compels  this  class  of  testators  to  combine  the  odious 
prerogative  of  primogeniture,  which  is  a  direct  violation 
of  the  principle  of  equality,  we  cannot  fail  to  perceive 
that  the  system  is  grossly  iniquitous.  How-  mani- 
festly unjust,  for  example,  for  the  land  owners  of 
one  generation  to  ordain,  and  for  the  state  to  confirm 
the  decree,  that  all  landed  property  shall  descend  the 
tide  of  time  in  a  few  streams  of  a  given  volume,  never 
to  be  divided,  nor  turned  aside  to  irrigate  and  fertilize 
the  toil  of  the  coming  millions ;  that  however  indus- 
trious, skilful  and  frugal  the  offshoots  of  those  lines 
may  be,  they  can  never  hope  to  participate  in  the  revenue 
flowing  from  that  which  nature  intended  for  the  benefit 
of  all.  And  how  pernicious  the  social  consequences  of 
this  policy,  since  its  inevitable  tendencies  are,  to  foist 
on  society  a  permanent  landed  aristocracy,  to  classify 
the  community,  to  render  the  few  permantly  rich  and 
powerful  and  the  many  hopeless  poor  and  ignorant,  and 
thus  to  augment  the  sum  of  human  misery.  For  these 


192  RIGHT   OF  PROPERTY  IN  LAND.  [PART    II. 

reasons,  the  laws  of  society  should  not  only  exclude 
primogeniture  and  entailment  from  the  right  of  bequest, 
but  they  should  prohibit  their  exercise.  The  true  policy 
is,  to  maintain  the  right  of  property  absolute  in  the 
living,  by  discountenancing  every  attempt  on  the  part  of 
individuals  to  impair  it  by  the  exercise  of  posthumous 
control  over  their  estates. — Most  nations  have  establish- 
ed the  right  of  bequest  with  larger  boundaries  than  here 
indicated^  They  have  included,  with  less  or  more  of 
limitations,  the  privileges  of  primogeniture  and  entail- 
ment ;  and  the  consequences,  as  exemplified  in  the  exist- 
ing condition  of  Great  Britain,  where  the  limitations  are 
less  stringent  than  in  most  other  nations,  are  sueh 
as  to  stamp  the  policy  as  directly  opposed  to  the 
dictates  of  justice,  equality,  and  the  public  good.  The 
United  States,  however,  under  the  guidance  of  those 
singularly  gifted  and  pure-minded  men  who  laid  the 
foundations  of  our  government,  have  adopted  the  true 
policy, -by  so  curtailing  these  privileges  as  to  virtually 
exclude  them  from  the  right  of  bequest. 

In  eon/elusion,  it  may  be  remarked  that  if  the  views> 
advanced  in  this  chapter  are  sound,  then  our  government 
machine,  in  its  section  devoted  to  the  establishment  and 
maintenance  of  the  right  of  property  in  land,  is  all  that 
can  be  desired.  It  needs  no  emendation  ;  any  attempt 
to  render  it  more  perfect  would  be  very  likely  to  in- 
crease its  defects. — Under  that  system,  proprietors  of  the 
soil  acquire  their  rights  therein,  either  by  purchase  in  an 
open  market,  or  by  inheritance  ;  and  if  by  the  latter,  we 
find,  by  tracing  backwards  the  lines  of  descent,  that 
these  lands  were  originally  obtained  by  purchase  also. 
Therefore,  it  may  be  said  that  no  one  can  become  the  owner 
of  land  without  giving  an  equivalent  in  exchange  for  it ; 
and  since  the  value  given  must  have  resulted  either  from 
the  industry  of  the  purchaser,  or  from  the  productive 


CHAP.    III.]       RIGHT  OF  PROPERTY  IN  LAND.  .    193 

employment  of  his  pre-acquired  capital  or  land,  or  partly 
from  each  of  these  sources,  it  follows  that  the  land  pur- 
chased is  as  rightfully  his  as  the  value  produced  by  his 
own  hands.  The  right  therefore  is  legitimate  ;  and  we 
have  seen  that  the  method  adopted  by  our  government 
for  conferring  it  on  individuals,  accords  so  perfectly  with 
the  principles  of  justice  and  political  equality  that  no 
portion  of  the  present  or  of  future  generations  can  with 
reason  complain  of  it.  The  prices  charged  for  our 
public  lands  are  barely  sufficient  to  cover  the  expenses 
incurred  in  furnishing  perfect  titles.  Virtually,  there- 
fore, the  government  holds  them  in  trust  as  the  birth- 
right, not  only  of  such  of  our  own  citizens  as  may  desire 
to  occupy  them,  but  of  those  who  choose  to  come  here 
from  other  countries  as  well ;  and,  unless  the  existing 
policy  be  changed,  they  will  remain  a  birthright  to  mil- 
lions yet  unborn.  And  when  the  period  shall  have  arrived 
in  which  all  the  lands  are  appropriated  and  occupied, 
our  exclusion  of  primogeniture  and  entailment  from  the 
right  of  bequest,  will,  by  maintaining  the  alienability 
of  the  right  of  property  in  land,  cause  this  right  to 
still  rest  on  the  broad  basis  of  equality,  and  thus  effec- 
tually protect  the  landless  from  the  injustice  and  the 
hopeless  poverty  entailed  upon  them  wherever  the  oppo- 
site policy  prevails. 

Before  closing  this  chapter,  it  may  be  well  to  notice  a 
doctrine  recently  started,  and  now  advocated  with  much 
zeal  in  certain  quarters — namely  :  That  the  public 
lands  should  be  sold  to  actual  settlers  only.  The  argu- 
ments advanced  in  favor  of  this  limitation,  appear  to  be 
based  on  the  asssumption  that  the  right  of  exclusive 
property  in  land  is  less  valid,  and  its  unconditional 
enforcement  less  just,  than  where  the  right  appertains 
to  artificial  products.  Land  being  a  free  gift  of  na- 
17* 


194  RIGHT  OF  PROPERTY  IN  LAND.          [PART  IT. 

ture,  and  evidently  designed  for  the  benefit  of  all,  it  is 
maintained  that  it  is  a  violation  of  natural  right  to  confer 
exclusive  titles  thereto,  (even  upon  the  payment  of  a 
fair  consideration)  on  those  who  purchase  with  the  design? 
of  withholding  it  for  a  season  from  productive  employ- 
ment, because  society  is  thereby  deprived  of  the  benefits 
derivable  from  its  service.     This  reasoning  is  plausible 
but  fallacious.     The  premises  are  true,  but  it  is  hoped 
that  arguments  already  adduced  have  sufficiently   shown 
that  they  do  not  warrant  the  conclusion.     Indeed,  the 
present  chapter,  as  well  as  the  two  which  precede  it,  have 
been  written  to  little  purpose  if  they  have  failed  to  demon- 
strate the  utter  falsity  of  that  conclusion. — There  is, 
however,  a  more  valid  objection  to  the  sale  of  public 
lands  to  others  than  actual   settlers,    which  might  be 
urged  in  favor  of  the  proposed  limitation.     It  is  this  : 
That  most  of  that  traffic  is  unproductive  of  value — in 
other  words,  pure  gambling.     When,  for  example,  an 
individual  buys  government  land?  not  with  the  intention 
of  distribution,  nor  of  immediate  or  prospective  occu- 
pancy, but  with  the   single  purpose  of  holding  it  for  a 
rise,  it  is  clear  that  the  transaction  does  not  come  within 
the  legitimate  limits  of  commerce  or  any  other  depart- 
ment  of  production,  because  no  augmentation  of  real 
value  ensues  :  what  the  individual  gains,  the  government 
loses,  or  vice  versa.     In  fact,  it  is  a  virtual  wager  be- 
tween the  two  :  the  individual  bets  that  the  market  value 
of  the  land  will  increase  more  rapidly  than  interest  will 
accumulate  on  the  purchase  money,  and  the  government 
bets  that  it  will  not.     It  is  probable  that  much  the  larger 
portion  of  the  sales  which  the   proposed   limitation  is 
designed  to  suppress,   are  of  this  character.     Another 
well  founded  objection  to  the  existing  system  is,  its  ten- 
dencies to  dispersion.     Non-residents  purchase  lands,  and 


CHAP.    III.]        RIGHT  OP  PROPERTY  IN  LAND.  195 

either  -withhold  them  from  market  or  demand  prices 
above  the  current  rate,  which  often  compels  the  actual 
settler  to  leave  broad  tracts  of  uncultivated  lands  in  his 
rear,  and,  hermit-like,  to  choose  his  residence  in  the 
wilds  of  nature,  remote  from  his  fellow  men.  These  are 
legitimate  arguments  in  favor  of  the  policy  under  con- 
sideration, and,  although  entitled  to  less  weight  than 
might  be  inferred  from  their  simple  statement,  they 
would  warrant  the  change  proposed,  but  for  the  fact  that 
other  considerations  of  far  weightier  import  forbid  it. 

That  the  evijs  just  referred  to  are  not  of  a  serious  kind, 
may  be  readily  shown.  Observation  teaches  that  purely 
speculative  purchases  of  the  national  domain,  are  mostly 
confined  to  periods  in  which  the  gambling  propensity  of 
man  is,  by  expansions  of  the  currency  and  other  incen- 
tives, so  strongly  stimulated  as  to  pervade  every  ram- 
ification of  commerce;  and  that  even  those  who  enter 
into  such  speculations,  in  these  seasons  of  general  delusion, 
are  very  willing  to  abandon  them  without  profit,  the 
moment  the  intoxication  passes  off.  The  fact  could  not 
well  be  otherwise,  for  speculations  of  this  character  must, 
as  a  general  rule,  result  unprofitably.  We  have  seen  that 
the  market  value  of  land  can  increase  no  faster  than  cap- 
ital or  population  ;  we  know  that  money,  at  the  usual 
rate  of  interest,  will  double  itself  in  ten  years,  and 
we  know  that  it  requires  twenty-three  years  to  double 
our  prolific  population,  even  with  the  aid  of  immi- 
gration. Hence,  money  at  interest  will  more  than 
quadruple  in  the  time  required  for  unemployed  land  to 
double  its  market  value.  It  is  to  be  noticed,  however, 
that  the  population  on  our  western  borders,  where  the 
public  lands  speculated  in  are  to  be  found,  increases  more 
rapidly  than  that  of  the  Union  at  large.  In  some  of 
the  territories  and  newly  admitted  states,  it  has  doubled 


196  RIGHT  OF  PROPERTY  IN  LAND.  [PART   II. 

in  even  a  shorter  period  than  ten  years.  But  it  must  be 
remembered  that  the  value  of  capital  is  mainly  reflected 
on  the  identical  land  with  which  it  concurs  productively — 
the  weaker  or  less  valuable  rays  only,  reaching  the 
uncultivated  lands  in  its  vicinity ;  and  therefore,  that 
lands  held  by  forestallers,  or  non-residents,  cannot  in- 
crease in  market  value  in  a  ratio  equal  to  that  with  which 
the  surrounding  population  and  capital  augments.  It  would 
probably  be  a  liberal  estimate  to  regard  the  mean  expan- 
sion of  the  market  value  of  such  lands,  as  equal  to  the 
mean  rate  of  increase  of  the  population  of  the  Union — 
say,  three  per.  cent,  per  annum.  Thus  it  appears  that 
observation,  experience  and  theory,  concur  in  proving  the 
traffic  unprofitable,  and  only  entered  into  by  a  few  mis- 
taken votaries,  except  in  seasons  of  commercial  mad- 
ness. Occasionally,  it  is  true,  some  fortunate  hit  in  the 
purchase  of  public  lands,  like  that  of  the  lucky  num- 
bers in  a  lottery,  rewards  the  adventurer  with  a  rich 
harvest  of  profits,  but  in  both  cases  the  odds  are  greatly 
against  him.  It  may  be  said,  therefore,  that  the  social 
evils  which  the  proposed  limitation  is  calculated  to  sup- 
press, are  neither  abounding  nor  aggravated. 

Let  us  now  glance  at  the  considerations  which  forbid 
the  change.  In  the  first  place,  it  may  not  be  amiss  to 
remark,  that  inasmuch  as  land  is  legitimate  property — 
there  being,  as  we  have  seen,  no  well  grounded  econ- 
omic distinction  between  it  and  any  other  form  of 
social  wealth — it  is  evident  that  the  reasons  urged  in 
favor  of  limiting  its  commercial  freedom,  may  be  applied 
with  equal  propriety  and  force  to  all  other  kinds  of  pro- 
perty. When  a  warehouse  or  dwelling  changes  owners, 
the  purchaser  is  at  liberty  to  choose  what  disposition  he 
will  make  of  it ;  he  may  either  occupy  it  himself  or  let 
it  to  others,  or  he  may  appropriate  it  to  idleness.  A 


CHAP.    III.]       RIGHT  OF  PROPERTY  IN  LAND.  197 

proposition  to  deprive  him  of  that  freedom  of  choice,  by 
restricting  him  to  occupancy,  would  be  justly  regarded 
as  an  absurd  and  unwarrantable  attempt  to  abridge 
individual  rights  ;  and  yet  this  proposition  is  almost 
identical  with  the  one  we  are  considering,  and  which  is 
now  pressed  upon  our  National  Legislature  with  some 
prospects  of  its  adoption.  Again  :  The  restriction  asked 
for,  would  be  a  direct  violation  of  the  principles  of  jus- 
tice and  equality.  The  national  domain  belongs  to  the 
people  at  large  ;  it  is  a  vast  undivided  property  in  which 
each  citizen  has  an  equal  interest,  and  to  which  no  indi- 
vidual or  class  can  rightfully  present  superior  claims  or 
preferences.  Now,  by  attaching  to  sales,  the  condi- 
tion of  immediate  occupancy,  a  large  portion  of  the  com- 
munity would  be  virtually  excluded  both  from  the  traffic 
inj>ublic  lands,  and  from  all  direct  benefits  derivable  from 
them,  because  many  who  possess  the  ability  to  purchase, 
and  desire  to  do  so,  either  as  an  investment  or  with  the 
view  of  future  occupancy,  may  be  altogether  unable  to 
comply  with  this  condition.  They  would  thus  be  deprived 
of  their  relative  rights,  and  excluded  from  a  legitimate 
traffic,  while  both  would  be  monopolized  by  those  who 
happened  to  possess  the  ability  to  comply  with  the  unjust 
condition,  a  large  proportion  of  whom  are  foreigners. 
If  the  restriction  could  be  made  to  exclude  none  others 
than  speculators  and  forestallers,  it  would  be  well  enough ; 
but  this  is  impracticable.  Purchases  for  investment,  or 
for  future  occupancy,  are  as  proper  as  those  made  by 
actual  settlers  ;  and  how  is  it  possible  to  distinguish 
between  these  and  purchases  made  in  the  spirit  of  gamb- 
ling 1  •  In  order  to  do  so,  it  would  be  necessary  for 
government  to  resort  to  the  expedient  of  demanding  from 
each  purchaser  a  declaration  of  motives.  This  demand, 
at  best  offensive  and  unwarrantable,  would  be  rendered 


198  RIGHT  OF  PROPERTY  IN  LAND.  [PART    II. 

odious  by  the  accustomed  insolence  of  the  subordinate 
agents  of  government.  Freemen  would  not  tolerate  its 
enforcement,  nor  would  the  expedient  be  competent  to 
attain  the  end  in  view,  if  submitted  to.  Motives  are  not 
easily  ascertained  ;  besides,  they  are  often  indefinite.  An 
individual,  for  instance,  may  purchase  government  land 
without  having  determined  whether  he  will  re-sell  it,  or 
hold  it  as  an  investment  or  for  future  occupancy :  his 
choice  will  be  determined  by  future  circumstances.  And 
if  he  has  formed  a  distinct  purpose,  and  buys  with  a 
definite  intention  as  to  appropriation,  he  will  not  be  over 
scrupulous  in  the  means  employed  to  conceal  that  inten- 
tion from  the  government  official.  These  considerations 
clearly  warrant  the  assertion,  that  gambling  in  the 
national  domain  cannot  be  suppressed  without  excluding 
from  the  right  of  purchase  those  who  desire  to  make 
legitimate  investments  therein  ;  which  exclusion,  as  we 
have  just  seen,  would  be  violative  of  the  rule  of  right, 
as  well  as  of  the  principle  of  equality ;  and  hence,  would 
produce  mischiefs  of  far  greater  magnitude  than  those 
which  it  would  be  competent  to  suppress.  The  proposed 
restriction  should  not  therefore  be  adopted. 


199 


CHAPTER  iv. 

OF  THE  REGULATION  OF  COMMERCE  ;  AND  OF  TAXATION. 

SECTION  1. 
General  Remarks. 

In  blending  the  consideration  of  two  governmental 
duties  so  distinct  as  those  which  form  the  title  to  this 
chapter,  I  may  perhaps  be  charged  with  confusing  my 
subject  by  an  unnatural  union  of  its  separate  parts.  A 
moment's  reflection,  however,  will  convince  the  reader 
that  the  course  I  have  chosen  is  rendered  necessary  by 
the  prevailing  policy  of  legislators  in  reference  to  com- 
merce and  taxation.  That  policy  unites  these  two  func- 
tions of  government,  and  aims  to  compass  the  ends  of 
both  by  means  of  a  single  law,  or  a  single  class  of  laws. 
That  the  regulation  of  commerce  and  taxation  are, 
naturally,  as  distinct  and  dissimilar  as  any  other  two  of 
the  prerogatives  of  government,  and  that  the  practice  of 
blending  them  in  legislation  is  attended  with  mischievous 
consequences,  I  readily  admit ;  but  since  almost  every  ex- 
isting revenue  law  designedly  conflicts  with  the  natural  laws 
of  trade,  and  thus  interferes  with  the  operations  of  com- 
merce, it  becomes  our  duty  to  consider  the  two  subjects 
together,  in  order  to  determine  the  qualities  and  test  the 
wisdom  of  these  double  edged  laws. 


200  REGULATION  OF  COMMERCE.  [PART    11. 

Commerce,  as  I  have  in  a  former  chapter,  is  an 
expedient  of  extraordinary  productiveness ;  it  has  greatly 
enlarged  the  volume  of  wealth  and  widened  the  circle 
of  human  enjoyments.  But  for  the  expedient  of  ex- 
change, each  individual  or  family  would  be  com- 
pelled to  labor  with  tools  of  its  own  construction, 
and  confine  its  consumptions  to  the  identical  articles 
produced  by  the  service  of  its  own  industry,  capital  and 
land.  Consequently,  in  the  absence  of  all  forms  and 
degrees  of  commerce,  no  one,  however  wealthy,  could 
obtain,  of  consumable  products,  a  variety  equal  to  that 
now  enjoyed  by  the  day  laborer,  unless  he  understood 
and  practiced  almost  every  vocation  in  the  whole  cata- 
logue of  productive  processes,  from  the  simplest  branch 
of  agriculture,  up  to  the  highest  department  of  art ; 
and  even  then,  he  would  be  compelled  to  forego  the  use 
of  agricultural  products  not  adapted  to  his  soil  and  cli- 
mate. Commerce,  by  executing  the  interchange  of 
commodities,  has  so  completely  removed  these  hindrances 
to  production,  that  every  variety  of  soil  and  climate, 
every  degree  of  muscular  strength  and  artistic  skill,  and 
every  form  of  productive  capital,  may  now  be  exclusively 
employed  in  whatever  division  or  subdivision  of  produc- 
tion their  respective  qualifications  best  fit  them  for. 

It  may  be  well  to  remark  that  the  term  Commerce  is 
here  used  in  its  widest  signification,  in  which  it  includes 
all  exchanges  of  property,  of  whatever  kind  or  quantity. 
In  proceeding  to  a  closer  examination  of  its  properties,  it 
will  be  well  to  divide  it  into  two  parts,  namely,  domestic 
and  foreign,  or  internal  and  external.  Convenience  and 
custom  both  point  to  this  division,  and  we  shall  find  that 
it  is  demanded  by  a  substantial  difference  in  the  attri- 
butes of  the  two  sections. 

Commerce,  in  the  aggregate,  performs  two  important 


CHAP.    IV.]  REGULATION  OF  COMMERCE.  201 

offices  of  utility :  it  increases  and  diversifies  the  pro- 
ducts of  industry  and  capital,  in  permitting  the  division 
of  employments  ;  and  it  augments  the  products  of  land, 
by  allowing  each  division  of  the  earth's  surface  to  be 
exclusively  appropriated  to  the  growth  of  such  useful 
plants  as  are  best  adapted  to  its  soil  and  climate.  The 
first  of  these  offices  is  mainly  performed  by  domestic  or 
internal  commerce.  It  enables  the  community  to  divide 
the  field  of  production  into  seven  grand  departments — 
namely,  agriculture,  manufactures,  commerce,  the  me- 
chanic arts,  navigation,  the  learned  professions,  and 
unskilled  manual  labor.  These  departments  it  also  ena- 
bles them  to  sub-divide  to  whatever  extent  convenience 
or  profit  dictate.  That  this  extent  is  well  nigh  unlimi- 
ted, is  evidenced  by  the  fact  that  it  has  been  found  expe- 
dient and  profitable  to  divide  the  process  of  making  a 
single  pin,  into  not  less  than  ten  distinct  mechanical 
arts. — By  means  of  these  divisions,  every  individual  is 
enabled  to  devote  himself  exclusively  to  whatever  occu- 
pation his  natural  endowments,  his  education,  or  his 
tastes,  may  indicate  as  most  appropriate. 

The  other  useful  attribute  of  commerce  is  chiefly  con- 
fined to  its  foreign  or  external  section.  It  may  be  illus- 
trated thus  :  In  temperate  latitudes,  with  appropriate 
soil,  wheat,  rye,  oats,  barley  and  potatoes,  are  produced 
with  facility ;  within  the  tropics,  sugar,  coffee,  cotton, 
rice  and  spices  are  produced  with  equal  ease  ;  but,  with 
the  aid  of  the  utmost  skill  and  labor,  neither  zone  can 
be  made  to  produce,  in  perfection  and  abundance,  the 
spontaneous  products  of  the  other.  For  instance,  in 
climates  congenial  to  the  growth  of  wheat,  coffee  must  be 
grown  in  a  conservatory,  if  at  all,  while  in  latitudes 
where  coffee  and  spices  are  indeginous,  wheat  can  only  be 
grown  in  a  refrigerator.  The  votaries  of  international 
18 


202  REGULATION  OF  COMMERCE.  [PART    II. 

commerce,  however,  with  suitable  appliances  and  ma- 
chinery— such,  for  example,  as  ships,  steamboats,  ware- 
houses and  money — stand  ready  to  carry  the  surplus  pro- 
ducts of  the  temperate  zones  to  the  tropics,  and,  after 
effecting  the  exchange,  to  bring  thence  the  surplus  products 
of  the  latter.  Now,  it  is  manifest  that  after  paying  the 
merchant  his  fitting  reward  for  this  service,  the  produ- 
cers of  both  latitudes  are  still  gainers  by  the  exchange, — 
that,  with  the  same  expenditure  of  productive  service, 
they  will  more  abundantly  supply  their  wants  by  this 
method,  than  by  attempting  to  produce  for  themselves 
things  which  nature  and  circumstances  prohibit ;  for,  if 
the  fact  were  otherwise,  self-interest  would  promptly 
interdict  the  traffic.  Wants  and  desires  are  thus  supplied, 
through  the  agency  of  foreign  commerce,  not  only  in 
greater  abundance,,  but  in  largely  increased  variety.  If 
any  individual,  either  rich  or  poor,  will  take  a  survey  of 
the  articles  he  is  in  the  habit  of  using  or  consuming  daily, 
he  will  find  that  a  large  proportion  of  them  would  be 
altogether  beyond  his  reach  but  for  this  arm  of  com- 
merce. And  if  we  include  the  advantages  received  from 
the  other  arm  of  commerce,  in  permitting  the  division 
of  employments  at  home,  we  may  safely  say  that  the 
adoption  of  this  expedient  has  so  elevated  the  condition 
of  mankind,  that  the  enjoyments  of  the  least  favored 
portion  of  those  who  partake  of  its  advantages,  greatly 
surpass  all  that  it  would  be  possible  for  the  most  fortu- 
nate and  gifted  to  procure  without  it. 

Such  being  the  noble  benefits  conferred  by  Commerce, » 
it  is  eminently  proper  that  government  should  aid  its 
development,  and  facilitate  its  operations,  so  far  as  it 
can  do  so  without  injustice  to  other  interests.  It  may 
rightfully  do  this,  by  establishing  uniform  standards  of 
weights,  measures,  and  money  ;  by  prescribing  simple 


CHAP.    IV.]  REGULATION  OF  COMMERCE.  203 

and  concise  rules  by  which  the  parties  exchanging  pro- 
ducts shall  be  governed  ;  by  establishing  rules  in  relation 
to  the  receipt,  transportation  and  delivery  of  goods  ;  by 
enacting  penal  laws  for  the  suppression  of  commercial 
frauds,  and  for  the  punishment  of  those  who  commit 
them ;  by  establishing  light-houses  and  preparing  cor- 
rect charts  of  the  ocean  ;  and  by  protecting  external 
commerce  from  spoliation.  These  simple  acts,  as  it 
appears  to  me,  constitute  about  the  whole  duty  of  govern- 
ment touching  this  department  of  production.  Within 
these  limits,  I  regard  the  regulation  of  commerce  us  a 
legitimate  prerogative  of  government,  because,  to  this 
extent  it  is  salutary,  and  may  be  exercised  without  injury 
to  other  interests.  But  legislators,  like  other  men, 
delight  in  the  exercise  of  authority ;  and  unless  restrain- 
ed by  public  opinion  or  fundamental  laws,  they  are 
prone  to  go  beyond  their  appropriate  sphere.  This  they 
have  done  in  reference  to  commerce — especially  its 
external  section,  to  a  most  pernicious  extent — in  all 
ages  and  in  all  countries.  Finding  no  constitutional 
restriction,  or  other  limitation  of  their  right  to  reg- 
ulate commerce,  their  authority  has  run  riot,  and  led 
to  the  adoption  of  commercial  codes  as  absurd  and  mis- 
chievous as  the  most  capricious  tyranny  could  suggest. 
In  apparent  ignorance  of  the  fact  that  the  undisturbed 
action  of  the  natural  laws  of  trade  never  fails  to  direct 
commerce  into  the  most  productive  channels,  and  to 
arrest  it  at  the  exact  limits  of  profitable  exchange,  they 
have  beset  it  with  bounties,  duties,  restrictions,  prohibi- 
tions and  international  treaties,  to  such  a  degree,  that  a 
large  per-centage  of  its  benefits  are  lost  to  mankind  ;  for 
it  is  manifest,  that  every  interference  of  this  character 
tends,  either  to  lessen  the  extent  of  commerce  or  to  divert 
it  from  channels  of  greater  productiveness  to  those  of  less. 


204  REGULATION  OF  COMMERCE.  [PART    II. 

Why  is  it  that  all  governments  persist  in  a  policy  so 
mistaken  and  absurd  as  that  which  wantonly  trifles  with 
commerce,  and  mars  its  utility  by  keeping  manacles  upon 
it  ?  Is  it  feared  that  its  freedom  would  produce  a  sur- 
feit, by  the  abundance  of  its  benefits"  ?  The  apprehen- 
sion is  neither  felt  nor  expressed.  Is  it  supposed  that 
commerce  diminishes  profits  1  There  are  none  so 
ignorant  as  to  entertain  this  belief.  Then  why,  I  ask 
again,  mar  its  blessings  by  legal  restrictions  and  prohibi- 
tions ?  The  answer  usually  given  by  those  who  advo- 
cate this  policy  is,  that  governments  are  better  qualified 
than  individuals  for  judging  correctly  as  to  the  direction 
and  extent  to  which  commerce  may  be  carried  with 
advantage  to  the  community ;  and  that  restrictions  on 
international  commerce  are  called  for  by  the  necessity  of 
countervailing  the  policy  of  other  governments,  as  well 
as  by  the  necessity  of  protecting  home  products  and  pro- 
ductive agents,  from  foreign  competition.  These  appear 
to  be  the  chief  grounds  on  which  the  restrictive  policy 
is  based  ;  for,  upon  examining  the  arguments  advanced 
in  its  favor,  it  will  be  found  that  they  generally  resolve 
themselves  into  efforts  to  establish  the  truth  of  the  fore- 
going propositions.  The  propositions  are,  nevertheless, 
unsound.  They  are  based  in  error,  not  in  truth,  nor  can 
all  the  arguments  wrhich  it  is  possible  to  frame,  invest 
them  with  that  attribute.  The  restrictive  policy  is  hurtful, 
not  beneficial ;  it  is  productive  of  injuries,  but  not  of 
blessings  of  any  kind.  It  is  the  offspring  of  ignorance 
and  fraud.  Some  of  its  advocates  are  prompted  by 
erroneous  views  of  the  subject,  others  by  the  fraudulent 
design  of  using  it  as  a  means  of  promoting  their  own 
interest,  or  that  of  a  class,  at  the  expense  of  the  whole. 
The  truth  of  these  assertions,  it  will  be  my  effort  to 
demonstrate  in  the  progress  of  this  chapter,  and  to  show 


CHAP.    IV.]  TAXATION.  205 

also,  that  it  is  the  true  policy  of  each  nation,  regard- 
less of  the  course  pursued  by  all  others,  to  leave  its 
foreign,  as  well  as  its  domestic  commerce^  entirely  free 
from  restraint  or  interferences  of  any  kind,  except  those 
simple  and  salutary  regulations  already  named. 

§  Next  as  to  taxation.  No  one  will  deny  to  government 
the  right  to  assess  and  collect  taxes  sufficient  to  keep 
itself  in  motion.  So  long  as  human  nature  remains  what 
it  now  is,  so  long  civil  governments  will  be  useful  in 
suppressing  that  which  is  evil  in  its  social  manifes- 
tations, and  of  developing  that  which  is  good ;  and 
so  long  as  civil  governments  continue  necessary  or 
useful,  so  long  it  will  be  proper  to  invest  them  with  this 
attribute  of  self-preservation  ;  for,  without  the  power  of 
raising  revenue,  they  could  not  exist  for  a  single  day. 
To  this  extent,  then,  taxation  is  clearly  a  legitimate  pre- 
rogative of  government.  It  is  generally  conceded  also, 
that  government  should  support  the  infirm,  unfriended 
poor,  and  place  within  the  reach  of  all  classes  a  given 
amount  of  education ;  which  offices,  it  could  not  perform 
in  the  absence  of  a  corresponding  power  of  taxation. 
These  offices  of  government  have  not  been  well  defined, 
nor  do  their  practical  illustrations  conform  to  any  uni- 
form rules,  or  established  maxims  ;  but  to  whatever 
extent  a  nation  may  deem  it  wise  to  exercise  them,  they 
clearly  carry  with  them  their  correlative,  taxation.  In 
fact,  every  authorized  function  or  prescribed  duty  of 
government,  carries  with  it  the  right  of  taxation,  so  far 
as  revenue  may  be  necessary  to  its  efficient  performance. 
Within  these  limits,  the  right  is  useful  and  its  exercise 
necessary ;  but  beyond  them,  taxation  becomes  an  usur- 
pation instead  of  a  right. 

In  exercising  this  prerogative,  legislators  have  diver- 
ged at  least  as  widely  from  the  true  policy,  as  they  have 
18* 


206  TAXATION.  [PART  n. 

in  the  regulation  of  commerce.  Instead  of  confining 
themselves  to  the  simple  duty  of  first  determining  the 
actual  amount  of  revenue  required  for  the  legitimate 
purposes  of  government,  next  assessing  the  taxes  on  pro- 
perty in  the  ratio  of  its  market  value,  and  then  collect- 
ing them  by  the  most  direct,  safe  and  economical  method 
— they  have  commonly  aimed  to  reach  the  pockets  of 
the  people  by  indirection,  and  to  abstract  a  portion  of 
their  contents  by  stealth,  regardless  of  the  inequality 
and  the  wasteful  extravagance  perpetrated  by  that  sys- 
tem. This  is  usually  done  by  taxing,  in  various  ways, 
consumable  commodities.  The  most  notable  method  of 
applying  this  species  of  taxation,  and  indeed  about 
the  only  one  adopted  by  the  United  States  government, 
is  by  what  are  termed  tariff  laws, — that  is,  by  levying 
duties  on  imports.  This  is  the  revenue  edge  of  the 
laws  by  which  commerce  is  "regulated,"  or  rather, 
crippled ;  for  it  is  thereby  driven  from  its  paths  of  greatest 
productiveness,  and  compelled  to  work  out  its  ends  limp- 
ingly  in  those  of  less.  I  shall  aim,  in  the  ensuing  sections, 
to  demonstrate  the  impolicy  of  this  class  of  laws,  whether 
regarded  as  a  system  of  raising  revenue,  or  as  a  means  of 
so  regulating  international  commerce  as  to  countervail 
the  policy  of  other  nations  and,  at  the  same  time,  to 
protect  home  interests  from  foreign  competition.  I  shall 
aim  to  show  also,  that  the  true  and  only  just  system  of 
taxation  is,  to  assess  a  uniform  per-centage  on  the  mar- 
ket value  of  all  property,  wherever  found,  and  to  enforce 
payment  from  its  possessors,  without  stopping  to  inquire 
whether  they  are  owners  or  merely  temporary  holders. 
Beside  the  error  of  legislators  as  to  the  method  of 
taxation,  they  not  unfrequently  raise  revenue  for  impro- 
per purposes, — as,  for  example,  when  it  is  raised  for  the 
payment  of  bounties  on  particular  products,  or  on  ex- 


CHAP.    IV.]  TAXATION.  207 

ports ;  for  the  payment  of  undeserved  pensions ;  for  the 
propagation  and  support  of  specific  religious  doctrines 
and  forms  of  worship ;  for  re-distribution,  &c.  Taxes 
for  all  such  purposes  are  illegitimate :  their  enforcement 
violates  the  principle  of  justice  by  compelling  one  class 
to  pay  tribute  to  another,  to  say  nothing  of  the  loss 
incurred  in  the  collection  and  disbursement. 

These  general  remarks  will  prepare  us  for  a  more 
detailed  consideration  of  the  prevailing  policy  of  govern- 
ments— especially  that  of  our  own — as  connected  with 
taxation  and  commerce ; — a  consideration  demanded  by 
the  practical  importance  of  the  subject,  as  well  as 
by  the  existence  of  conflicting  theories  in  regard  to  it. 


SECTION  II. 

Of  tariff  laws,  considered  as  a  means  of  raising  re- 
venue ;  and  of  direct  taxation.  The  merits  of  the 
two  methods  compared. 

In  a  former  chapter,  I  have  endeavored  to  point  out 
the  proper  purposes,  ends  and  aims  of  civil  government. 
Whatever  may  be  thought  of  the  theory  there  advanced, 
all  will  admit  that  to  establish  justice  between  man  and 
man,  by  protecting  each  and  all  in  their  rights  of  person 
and  property,  is  not  only  a  rightful  prerogative  of  govern- 
ment, but  one  of  the  most  important  of  the  ends  which 
it  was  instituted  to  secure.  We  may  say,  therefore, 
that  the  government  which  neglects  this  duty,  or  fails  in 
its  performance,  is  too  weak  or  insufficient  for  the  attain- 
ment of  its  most  beneficit  end.  If  it  goes  beyond 
this,  and  needlessly  restrains  the  freedom  of  the  citizen  or 
subject,  it  is  too  despotic.  But  what  shall  we  say  of  the 


208  TAXATION.  [PART.  n. 

government  which  not  only  fails  to  establish  justice,  but 
designedly  establishes  injustice,  by  laws  of  its  own  enact- 
ment? What  opprobious  epithet  will  sufficiently  express 
the  infamous  character  of  such  laws  ?  To  say  that  such 
a  government  is  a  curse  instead  of  a  blessing,  and  that 
such  laws  are  flagrant  manifestations  of  usurped  power, 
is  but  a  mild  expression  of  their  true  character.  And 
yet  it  will  appear,  when  we  come  to  examine  the  protec- 
tive feature  of  tariff  laws,  that  they  not  only  do  legalize 
injustice,  by  compelling  one  classnbf  citizens  to  pay 
tribute  to  another  class,  but  that  they  are  purposely 
intended  to  produce  that  effect.  Nor  is  their  revenue 
feature  entirely  free  from  the  same  weighty  objection. 

Government  being  instituted  for  the  purpose  of  secur- 
ing the  right  of  property,  as  well  as  for  the  protection* of 
the  person,  it  is  but  just  that  property  should  bear  a 
portion  of  its .  Burthens.  It  should,  as  it  seems  to  me, 
contribute  the  whole  amount  of  taxes,  because  the  person 
must  bear  the  hazards  of  war,  and  is  required  to  render, 
gratuitously,  numerous  services  in  support  of  government , 
— such,  for  instance,  as  military  trainings,  jury  duty, 
and  the  various  duties  incident  to  the  elective  franchise ; 
which  last,  if  performed  with  intelligence  and  fidelity, 
consume  much  time  and. mental  service.  The  person, in 
fact,  gives  all  that  it  has  to  give,  the  requisite  amount  of 
physical  and  mental  service ;  so  capital  should  contribute 
that  which  it  is  alone  capable  of  contributing,  the  necessary 
amount  of  pecuniary  means.  The  tariff  method  of  rais- 
ing revenue,  rudely  violates  this  just  basis  of  taxation, 
by  predicating  its  assessments  upon  consumptions  instead 
of  capital. 

That  tariff  laws  and  other  indirect  methods  of  taxation 
have  been  resorted  to  by  most  of  the  nations  of  Europe, 
is  not  surprising.  Their  governments  are  of  the  aristo- 

v'tlt^    £>ec*vri 
Q+CftuM'- 


CHAP.   IV.  J  TAXATION.  209 

cratic  type  —  that  is,  the  few  rule  and  the  many  obey; 
and  whenever  this  is  the  case,  we  must  expect  to  see  the 
selfish  principle  of  human  nature  manifest  itself  in  acts 
of  injustice  and  tyranny.  Accordingly,  we  find  the 
governing  class  exacting  from  the  governed,  not  only 
the  chief  portion  of  the  taxes,  but  onerous  contribu- 
tions for  their  own  peculiar  benefit.  They  do  this,  not 
boldly  and  openly  —  for  they  fear  the  physical  power  of 
those  whom  they  thus  wrong  —  but  by  the  stealthy  methods 
referred  to,  in  order  to  hide  from  their  subjects  the 
extent  to  which  they  are  fleeced.  And  we  republicans, 
who  claim  to  be  equals,  all  sovereigns  as  well  as  citizens, 
have  followed  their  pernicious  example  ;  in  doing  which, 
we  have  been  guilty  of  the  folly  of  resorting  to  deception  - 
to  wrong  ourselves  !  We  tamely  submit  to  unnecessary 
and  unequal  taxes  by  indirection,  which  we  would  indig- 
nantly refuse  to  contribute  if  openly  demanded  of  us. 
It  would  be  an  amusing  scene,  I  fancy,  to  witness  the  tax 
gatherer,  on  his  tour  of  collection,  under  such  a  change  in 
our  system  as  would  require  the  payment  of  all  our  taxes, 
direct  and  indirect,  open  and  covert,  to  be  made  in  direct  '- 
annual  instalments,  —  the  assessments  meanwhile  retain- 
ing their  present  unjust  and  unequal  distribution.  The 
amount  we  now  pay,  when  brought  in  its  annual  aggregate 
thus  distinctly  to  our  senses,  would  be  startling.  To 
those  of  small  incomes  with  large  families,  it  would  be 
absolutely  astounding.  They  would  be  likely  at  first  to 
consider  the  officer  insincere  in  his  demands,  but  finding 
him  to  persist,  they  would  probably  regard  him  as  either 
a  madman  or  robber,  and  treat  him  as  such.  And  yet  it 
would  be  quite  as  easy  for  them  to  pay  their  taxes  in 
that  shape  as  in  the  present. 

I  have  made  a  rough  estimate  of  the  gross  amount  of 
taxes  paid  by  the  people  of  the  United  States  —  including 


*        -   ' 


210  TAXATION.  [PART.  n. 

therein,  the  taxes  paid  to  manufacturers  in  the  shape  of 
increased  prices  received  for  their  goods  in  conse- 
quence of  the  protection  afforded  them  by  the  duties 
charged  upon  imports,  and  those  paid  in  the  shape  of 
losses  on  the  bills  of  broken  and  discredited  banks  for 
the  privilege  of  using  paper  money,  as  well  as  the  legi- 
timate taxes  for  town,  county,  state  and  national  pur- 
poses— and  I  find  that  the  annual  aggregate  will,  by  an 
estimate  more  likely  to  fall  below  than  to  exceed  the 
actual  amount  paid,  reach  the  prodigous  sum  of  $310,- 
000,000,  or  about  $1,000,000  per  day.  Counting  the 
number  of  taxable  citizens  at  three  millions,  the  average 
for  each  is  $103  per  annum,  or  33  cents  per  day ;  so 
that  if  the  taxes  fell  on  industry  alone,  they  would  absorb 
at  least  one-third  of  its  gross  products.  This  statement 
is  astounding,  but  nevertheless  true.  The  subject  de- 
mands investigation ; — our  present  methods  of  raising 
revenue  urgently  require  the  pruning-knife  of  reform,  to 
lop  off  the  execresencies  which  have  swollen  the  mass  of 
our  takes  to  this  frightful  amount.  As  before  remarked,the 
great  error,  if  not  the  only  one  committed  by  our  govern- 
ment in  this  respect  is,  in  raising  revenue  from  imports. 
Let  us  then  proceed  to  point  out  the  mischievous  con- 
sequences of  that  policy. 

In  order  to  do  this  and  at  the  same  time  demonstrate 
the  superiority  of  direct  taxation,  we  will  examine  the 
practical  operation  of  each  of  these  methods  of  raising 
revenue,  and  compare  their  merits  when  tested  by  the 
principles  of  equality  and  economy.  Fortunately,  we 
have  good  data  to  guide  us  in  this  investigation,  since, 
while  the  general  government  practices  the  one  method, 
some  of  the  states  practice  the  other.  In  the  first  place, 
let  us  see  how  they  compare  in  point  of  economy. 

We  pay  in  custom  dues  an  annual  average 
of,    say ' $25,000,000 


CHAP.    IV.j  TAXATION.  211 

We  pay  to  the  importer,  say  15  per  cent, 
profit  on  this  sum,  for  it  is  well  known  that 
the  merchant  predicates  his  profits  upon  the 
whole  cost  of  his  goods — upon  the  duties 
and  charges,  as  well  as  upon  the  prime 
cost ; 3,750,000 

We  pay  to  the  jobbing  merchant,  say 
10  per  cent,  profit  on  these  two  sums 2,875,000 

We  pay  to  the  retailer,  say  25  per  cent, 
profit  on  these  three  sums. . 7,906,250 


$39,531,250 

We  have  here  an  aggregate  of  $39,531,250  of  taxes, 
paid  by  the  consumers  of  foreign  goods,  of  which  the 
government  receives  but  $25,000,000 ;  and  from  this 
sum  must  be  deducted  all  the  expenses  incurred  in  its 
collection.  These  include,  all  the  rent  paid  for  the  use 
of  custom  houses  and  government  warehouses,  together 
with  interest  on  the  cost  of  those  owned  by  the  govern- 
ment ;  the  salaries  of  the  collectors  of  customs,  and  of  the 
army  of  subordinate  officers ;  and  the  expenses  incident 
to  the  marine  revenue  service.  These,  taken  together, 
cannot  be  short  of  $2,500,000  per  annum.  This  leaves 
the  net  receipts  of  government  $22,500,000,  which  is  but 
little  more  than  half  of  the  gross  amount  contributed ; 
or,  to  state  the  matter  more  definitely,  revenue  is  collect- 
ed from  the  people,  by  the  tariff  method,  at  an  expense 
of  77  per  cent,  on  the  net  amount  received  by  govern- 
ment. I  have  purposely  excluded  from  this  estimate, 
the  immense  tribute  which  these  laws  compel  the  con- 
sumers of  protected  domestic  products  to  pay  to  their 
producers,  because  the  contrast  will  be  found  striking 
enough  without  it;  and  for  the  additional  reason,  that  this 
tribute  will  be  the  prominent  subject  of  our  next  sec- 


212  TAXATION.  [PART  IT. 

tion.  But  it  may  be  well  to  state  in  this  place,  that  the 
late  Secretary  of  the  Treasury,  after  an  elaborate 
examination  of  the  question,  has  estimated  the  amount 
of  tribute  thus  paid,  under  the  tariff  of  1842,  at  not 
less  than  $100,000,000  annually. 

We  find,  then,  that  the  tariff  system  of  taxation  has 
not  the  merit  of  economy  to  recommend  it.  Now  let  us 
look  at  this  aspect  of  its  proposed  substitute,  direct  tax- 
ation. A  few  years  since,  the  State  of  New  York,  find- 
ing that  she  needed  additional  revenue,  levied  what  was 
called  "  the  Mill  Tax ;"  that  is,  her  citizens  were  re- 
quired to  contribute  one  mill  of  taxes  for  every  dollar  of 
capital  or  property  that  they  possessed.  This  tax  pro- 
duced an  aggregate  of  $600,000.  The  assessment  and 
collection  of  this  amount  of  revenue,  cost  the  state  a 
sum  not  exceeding  $12,000,  or  two  per  cent  on  the 
amount  collected,  which  is  75  per  cent,  cheaper  than  the 
tariff  method.  And  there  is  no  obstacle  which  need 
prevent  the  general  government  from  adopting  the  same 
plan.  It  is  perfectly  feasible,  and  the  transition 
easy.  For  example,  the  same  officers  who  now  assess 
and  collect  the  township,  county,  and  state  taxes,  in  the 
several  states,  could  assess  and  collect  this  also.  It 
could  be  accomplished  without  the  employment  of  a 
single  additional  officer,  and  at  an  expense  not  exceeding 
two  per  cent.  In  order  to  secure  safety  and  economy, 
as  well  as  an  equitable  distribution,  the  general  govern- 
ment should  apportion  the  tax  among  the  several  states, 
in  the  ratio  of  property,  or  what  amounts  to  about  the 
same  thing,  in  the  ratio  of  population,  and  require  each 
state  to  furnish  its  quota.  The  states  would,  as  they 
now  do  in  the  management  of  their  own  taxes,  apportion 
it  among  their  respective  counties,  requiring  each  to 
furnish  its  share ;  and  the  counties  would  apportion  it 


CHAP.  IV.]  TAXATION.  213 

among  the  townships.  Thus  the  federal  government 
would  look  to  the  states,  the  states  to  the  counties,  the 
counties  to  the  towns,  and  the  towns  to  the  people,  which 
would  give  to  the  latter  the  right  of  choosing,  through 
their  respective  township  organizations,  their  own  rules  of 
assessment  and  their  own  collecting  officers.  When  we 
consider  how  directly  their  personal  interests  would  be 
involved  in  the  matter,  we  cannot  doubt  that  they 
would  exercise  this  right  with  a  single  eye  to  economy 
and  fairness.  Nor  would  they  fail,  when  thus  dir- 
ectly called  upon  to  furnish  their  quota  of  taxes,  to 
scrutinize  the  purposes  for  which  the  taxes  were  asked, 
with  the  determination  of  putting  their  veto  on  such  as 
they  found  to  be  unnecessary.  In  this  way  many  of  the 
existing  abuses  of  the  taxing  power  would  be  suppressed. 
This  system  of  applying  the  direct  method  of  taxa- 
tion, has  been  adopted  by  most  of  the  states,  coun- 
ties and  towns  of  the  United  States,  and  with  the  hap- 
piest results.  It  has  proved  to  be  not  only  just  and 
economical,  but  eminently  secure,  for  we  rarely  hear 
of  a  defaulting  officer  except  in  large  cities.  Within 
these,  occasional  defalcations  on  the  part  of  tax  collec- 
tors take  place,  but  they  are  clearly  attributable  to  the 
unwise  policy,  which  usually  prevails  in  cities,  of  con- 
ferring these  offices,  as  well  as  most  others,  on  political 
partizans.  In  the  appointment  of  custom  house  officers, 
applicants  of  the  character  just  named  seem  to  receive  an 
invariable  preference  over  all  others.  From  the  collec- 
tors down  to  the  tide-waiters  inclusive,  we  find  them  to 
be,  with  rare  exceptions,  political  partizans  of  the  least 
scrupulous  kind.  When  weconsider  further  that  the  peo- 
ple have  no  voice  in  their  appointment,  that  the  collec- 
tors of  customs  and  their  principal  subordinates  are  all 
selected  bythe  President  of  the  United  States,  who  can- 
19 


214  TAXATION.  [PART.  n. 

not  be  expected  to  have  any  personal  knowledge  of  their 
charactersor  their  qualifications,  we  cannot  be  surprised 
at  the  number  and  magnitude  of  the  defalcations  which 
hare  occurred  among  them ;  since,  from  such  materials 
thus  chosen,  we  could  expect  no  other  result. 

We  find,  then,  that  the  direct  method  of  taxation  is 
vastly  superior  to  the  tariff  form  of  the  indirect  method, 
not  only  in  point  of  economy,  but  equally  so  as  regards 
security  in  the  processes  of  collection  and  transmission 
to  the  disbursing  officers*  According  to  the  estimate 
just  presented,  the  gross  cost  of  collecting  our  national 
revenue  by  the  existing  method,  exceeds  $17,000,000 
per  annum,  while  that  which  would  attend  its  collection 
by  the  method  proposed,  would  fall  short  of  $500,000, 
showing  a  difference  in  favor  of  the  latter  of  $16,500,- 
000  per  annum.  To  this  sum  we  may  safely  add  $500,000 
for  the  excess  of  losses  by  the  former,  making  the  whole 
difference  in  favor  of  the  latter,  in  an  economical  point 
of  view,  not  less  than  seventeen  millions  of  dollars  annu- 
ally. This  immense  sum  the  people  of  the  United 
States  would  save  yearly,  in  diminished  taxation,  by  the 
abandonment  of  tariff  laws  and  the  substitution  of  a 
judicious  system  of  direct  taxation. 

Let  us  now  examine  the  two  methods  in  another  of 
their  aspects,  and  determine  their  relative  merits  when 
tested  by  another  principle — the  principle  of  justice. — 
Which  is  the  most  equitable  as  a  rule  of  assessment  ? 
In  other  other  words,  which  causes  the  distribution  of 
the  burdens  of  government  to  correspond  most  nearly 
with  the  distribution  of  its  benefits  1 

I  am  entirely  satisfied,  for  my  own  part,  that  the  rule 
of  assessment  already  indicated  is  the  true  and  only 
just  one ;  namely,  that  taxes  should  be  assessed  exclu- 
sively on  property,  and  not  at  all  on  persons,  except  a* 


CHAP.    IV.J  TAXATION.  215 

the  representatives  of  the  property  which  they  respec- 
tively hold.  But  lest  others  should  douht  the  equity  of 
this  rule,  I  will  take  another  position,  the  justice  of 
which  no  one  will  dispute.  It  is  this  :  that  taxes  should, 
at  the  least,  so  far  correspond  with  the  degree  of  wealth 
as  to  compel  the  rich  to  pay  more  than  the  poor. 
When  we  reflect  that  the  protection  of  property  is 
one  of  the  most  useful  functions  of  government,  and 
that  the  peformance  of  this  function  constitutes  its 
most  onerous  duty,  we  cannot  but  admit  the  justice 
of  requiring  property  to  bear  at  least  a  portion  of 
itsburdens.  The  only  way  in  which  it  can  be  made 
to  do  so  is  by  taxing  it,  through  its  different  holders,  at  a 
rate  which  shall  be  uniform  when  compared  with  the 
amount  or  value  of  the  property  held  by  each  respec- 
tively. According  to  our  first  rule  of  assessment,  the 
distribution  of  taxes  should  be  in  the  exact  ratio  of  the 
distribution  of  property.  But  if  it  be  considered  right, 
in  view  of  the  fact  that  government  protects  persons 
as  well  as  property,  to  compel  persons  to  bear  not  only 
the  whole  of  its  physical  and  mental  burdens,  but  a 
share  of  its  pecuniary  burdens  also,  then  this  portion 
should  be  assessed  on  persons,  in  the  form  of  a  per  capita 
or  poll  tax,  and  the  balance  distributed  in  the  ratio 
of  the  distribution  of  property.  Under  this  rule, 
therefore,  taxation  would  bear,  not  an  exact  but  an 
approximate  proportion  to  the  amount  of  property  held ; 
which,  it  will  be  perceived,  is  in  accordance  with  our 
second  position,  or  formula  of  assessment,  namely :  the 
greater  the  wealth  of  the  individual,  the  higher  should 
be  his  taxes. 

It  will  not  be  denied,  I  think,  that  one  or  the  other  of 
these  rules  is  the  correct  one ;  nor  will  it  be  denied  that 
direct  taxation  is  the  only  practicable  method  of  enforcing 


216  TAXATION.  [PART  u. 

either.  By  this  method  we  may  readily  enforce  which- 
ever rule  is  deemed  most  politic  and  just,  as  is  proved  by 
the  experience  of  our  several  states,  some  of  which  have 
adopted  the  first,  others  the  second,  and  in  no  case  has  it 
been  found  difficult  to  enforce  either.  It  must  be  acknowl- 
edged, however,  that  our  state  governments,  in  framing 
their  rules  of  assessment,  have  generally  committed  one 
important  error.  Mistaking  mortgages,  notes  of  hand, 
and  other  representations  of  property  for  property  itself, 
they  have  classed  them  as  such,  and  required  that  they,  as 
well  asthe  property  they  represent,  should  be  taxed ;  con- 
sequently, all  property  that  is  either  incumbered,  loaned, 
or  in  any  manner  held  by  others  than  its  actual  owners,  is 
taxed  double.  This  error  is  probably  the  joint  effect  of 
two  causes.  It  must  be  attributed  in  part  to  a  miscon- 
ception of  the  nature  of  property,  but  mainly,  I  appre- 
hend, to  the  desire  of  taxing  the  owners  of  property 
rather  than  its  indebted  possessors.  The  desire  is  laud- 
able, but  the  expedient  resorted  to  for  securing  its 
object'  is  about  as  ineffectual  as  I  have  shown  it  to  be 
unjust.  Wealth  which  consists  in  the  ownership  of  pro- 
perty held  by  others,  or  in  claims  of  any  kind  against 
others,  is  easily  hidden,  and  the  knowledge  of  its  posses- 
sion in  a  great  measure  withheld  from  the  agents  of 
taxation,  in  consequence  of  which  it  has  been  found 
utterly  impossible  in  practice,  to  tax  it  with  any  degree 
of  uniformity.  The  more  conscientious  of  its  holders 
are  compelled  to  pay  on  the  full  amount  held,  while  the 
less  scrupulous  escape  either  a  part  or  the  whole.  The 
true  policy  is  to  tax,  in  the  ration  of  its  market  value, 
real  property  only  (not  its  shadows  or  representations) 
and  to  enforce  payment  from  its  holders.  By  this  simple 
rule,  not  only  all  property  would  be  taxed,  and  taxed 
equally,  but  the  taxes  would  be  paid  either  directly  or  indir- 


CHAP,    IV.]  TAXATION.  117 

ectly  by  the  actual  owners.  Where  the  owner  held  his 
property  in  possession  he  would  of  course  pay  the  taxes 
directly ;  where  he  had  let  or  loaned  it  to  others,  the 
lessees  or  borrowers  would  pay  less  for  its  use,  by  an 
amount  equal  to  the  taxes  demanded  of  them,  than  they 
would  do  if  the  proprietor  himself  were  required  to  pay 
the  taxes  ;  from  which  it  will  be  seen  that  the  latter  would 
be  compelled  to  pay  them  indirectly.  Thus  the  owners  of 
leased  property,  mortgages,  notes  of  hand,  book  accounts, 
joint  stock  shares,  and,  in  fact,  every  form  of  representa- 
tive property  (except  public  securities — these  being  ghosts 
of  departed  property  rather  than  representations  of  that 
which  really  exists,)  would  be  reached  by  the  taxing  [power, 
through  the  indebted  holders  of  property  itself ;  so  that 
the  ultimate  distribution  of  taxes,  by  the  rule  given, 
would  correspond  with  the  actual,  not  the  apparent  dis- 
tribution of  wealth. 

This  then  is  the  perfect  rule  of  assessment,  and  direct 
taxation  the  true  method  of  enforcing  it.  Their  joint 
results  are  precisely  those  which  every  honest  legislator 
should  aim  at,  because,  in  addition  to  their  superior 
economy  and  safety,  they  distribute  the  burdens  of 
government  in  exact  proportion  to  the  benefits  conferred 
by  it.  This  principle  commends  itself  not  less  by  its 
expediency  than  by  its  perfect  equity ;  since  it  is  at  least 
as  easy  for  the  wealthy  to  contribute  a  given  per- 
centage of  their  capital  as  it  is  for  the  poor  to  con- 
tribute a  like  per-centage  of  theirs.  The  rich  may  be 
less  willing  to  part  with  it,  and,  as  a  general  rule,  are 
80,  I  believe ;  but  it  does  not  in  truth  inconvenience  them 
BO  much. 

Our  tariff  method  of  taxation  entirely  disregards  this 
manifestly  just  principle, — substituting  for  it.  as  a  rule 
of  assessment,  the  amount  of  consumptions,  which 
19* 


218  TAXATION.  [PART  ir. 

compels  us  to  pay,  not  in  proportion  to  the  benefits 
received,  nor  in  the  ratio  of  our  means  of  payment,  but 
according  to  the  number  of  mouths  we  have  to  feed  and 
bodies  to  clothe.  The  practical  operation  of  this  often 
is,  to  tax  the  poor  higher  than  the  rich ;  for  it  were  easy 
to  demonstrate,  if  the  notoriety  of  the  fact  did  not  pre- 
clude the  necessity,  that  there  are  large  numbers  of  our 
population,  whose  only  wealth  consists  of  a  numerous 
progeny  entirely  dependent  upon  their  daily  earnings  for 
support,  who  contribute  more  to  the  revenue  of  the 
federal  government  than  do  an  equal  number  which 
might  be  selected  from  the  wealthiest  class  of  our  citi- 
zens. How  manifestly  unjust!  He  who  has  millions  in 
property  for  the  protection  of  which  he  looks  to  govern- 
ment, pays  less  towards  the  support  of  that  government 
than  does  the  pennyless  day-laborer !  He  who  is  better 
able  to  contribute  his  thousands  of  dollars  than  the  poor 
man  is  to  contribute  one,  in  reality  pays  less  !  Surely, 
a  method  of  taxation  which  operates  thus  inequitably, 
which  thus  favors  the  rich  and  oppresses  the  poor,  must 
be  alike  impolitic  and  unjust.  I  am  aware  that  the 
attempt  has  often  been  made  to  obviate  these  objections 
by  placing  the  highest  duties  upon  luxuries,  with  the  use 
of  which  the  poor  may  dispense ;  but  it  has  invariably 
failed  in  practice,  because,  while  it  placed  them  beyond 
the  reach  of  the  poor,  it  also  deterred  the  rich  from  their 
use,  and  thus  failed  to  produce  the  needful  revenue.  Be- 
sides, it  is  not  republican  thus  to  classify  society,  to  de- 
grade the  poor  by  artificially  raising  the  price  of  certain 
articles  above  their  means  of  purchase  :  their  unfortunate 
condition  sufficiently  circumscribes  the  circle  of  their  en- 
joyments, without  the  aid  of  any  such  surreptitious  de- 
privations on  the  part  of  their  government.  Our  present 
tariff  has  not  the  poor  merit  of  attempting  this  means  of 


CHAP.    IV.  J  TAXATION.  219 

compelling  the  rich  to  pay  higher  taxes  than  the  poor,  for 
its  variations  from  a  horizontal  line  of  duties  are  gradu- 
ated with  an  eye  to  revenue,  and  to  enlarged  protection  to  a 
few  pet  interests,  rather  than  with  the  design  of  favoring 
the  poor.  And  as  relates  to  the  tariff  of  1842,  it  would 
seem  to  have  been  framed  with  the  express  design  of 
oppressing  the  poor,  since,  by  the  contrivance  called 
minimums,  it  taxed  the  coarser  and  cheaper  fabrics, 
which  the  poor  are  constrained  to  use,  much  higher  in 
proportion  to  their  value  than  it  did  the  more  costly 
fabrics  consumed  by  the  rich. 

The  wasteful  extravagance  of  this  method  of  raising 
revenue,  combined  with  the  glaring  injustice  of  its  rule 
of  assessment,  would  seem  to  be  enough  to  insure  its 
general  condemnation  and  instant  abandonment.  If 
judged  solely  by  its  revenue  merits,  such  would  certainly 
be  its  fate  ;  but  it  happens  to  be  endowed  with  another 
attribute  which,  although  equally  mischievous,  finds 
many  interested  friends.  I  of  course  refer  to  Protection. 
This  excites  the  cupidity  of  the  favored  classes,  and 
leads  them  to  ply  with  unwearied  assiduity,  every  art  and 
argument  at  their  command  calculated  to  mislead  public 
opinion.  Thus  far  they  have  partially  succeeded.  They 
have  enveloped  the  subject  in  a  cloud  of  sophistry  so  thick 
that  the  minds  of  a  majority  of  the  community  have  .not 
yet  been  able  to  recognize  the  true  character  of  protec- 
tion. Many,  however,  have  succeeded  in  looking  di- 
rectly through  the  deceptive  mantle  wherewith  this  policy 
has  been  clothed  by  its  interested  friends,  and  they 
have  discovered  that  it  has  not  the  semblance  of  justice 
or  wisdom  about  it  ;  —  that  while  it  utterly  fails  to  pro- 
duce benefits  it  is  fruitful  of  injuries  ;  —  that,  instead  of 
counterbalancing  the  evils  incident  to  the  revenue  feature 
of  tariff  laws,  it  aggravates  them  by  the  infliction  of 

"  V^Vv^ 


I 


220  RIGHT    OF   PROPERTY    IN    LAND.         [PART    II. 

others  of  a  still  more  hurtful  kind,  as  will  be  shown  in  the 
ensuing  section. 

Another  objection  to  the  tariff  method  of  raising 
revenue,  is  the  uncertainty  of  its  amount.  It  is  ever 
fluctuating  with  the  ebb  and  flow  of  commerce,  giving  in 
prosperous  seasons  much  more  of  revenue  than  the  govern- 
ment requires,  which  necessarily  leads  to  extravagance 
and  corruption  ;  while  in  seasons  of  commercial  depression 
the  revenue  yielded  is  unequal  to  the  wants  of  govern- 
ment, which  sends  the  latter  into  the  market,  a  needy 
borrower,  at  a  time  when  it  is  most  difficult  to  effect  loans. 
Direct  taxation  is  free  from  these  objections,  since  it 
would  enable  the  government  at  all  times  to  collect  the 
precise  amount  of  revenue  required.  Should  objections 
be  urged  against  this  method  on  the  ground  that  it  would 
give  the  revenue,  not  in  a  continuous  stream,  as  it  should 
do  to  meet  the  ever  recurring  wants  of  government,  but 
in  annual  instalments,  it  may  be  replied  that  this  is  not 
an  unavoidable  consequence.  It  may  be  obviated  in 
various  ways,  one  of  which  would  be  to  have  different 
periods  of  payment  for  the  different  states. 

There  is  yet  another  objection  of  great  weight  to  our 
tariff  method  of  taxation.  It  is  demoralizing.  Expe- 
rience has  proved  that  executive  patronage  is  a  fruit- 
ful source  of  corruption.  This  method  of  taxation 
greatly  enlarges  that  patronage,  because  it  invests  the 
President  with  authority  to  appoint  all  the  revenue  offi- 
cers, —  a  power  which  the  people  would  be  careful  to  re- 
serve to  themselves  under  the  direct  method.  It  also 
leads  to  the  commission  of  frauds  on  the  revenue  by 
means  of  smuggling,  perjury,  and  other  flagrant  viola- 
tions of  law,  all  of  which  tend  to  lower  our  national 
standard  of  morality,  and  in  an  equal  degree  to  dimin- 
ish our  capacity  for  self-government.  The  direct  method, 


•X  \  -V*- 

.^*l 


CHAP.    IV.]  TAXATION.  221 

if  carried  out  in  accordance  with  the  plan  and  rules 
which  I  have  indicated,  would  be  altogether  free  from  these 
vicious  consequences.  *$w* v 

We  find  then,  #8-the  general  result  of  our  examina- 
tion and  contrast,  that  direct  taxation  is,  in  every  essen- 
tial feature,  vastly  superior  to  our  present  method  ; — that 
the  former  accords  with  justice,  economy,  and  all  the 
other  requirements  of  a  sound  policy,  while  the  latter 
violates  every  principle  on  which  legislation  should  be 
based.  It  must  be  owned,  however,  that  notwithstanding 
the  weighty  objections  to  the  one,  and  the  economy  and 
perfect  fairness  of  the  other,  there  are  but  few  of 
our  citizens  who  are  desirous  of  making  the  proposed 
change.  "Direct  Taxation"  is  a  phrase  that  grates 
harshly  on  the  nerves  of  all.  Men  start  at  its  sound 
as  though  it  was  potent  in  evil, — something  which  had 
once  impressed  them  with  deadly  fear.  They  seem  to 
regard  it  as  deeply  imbued  with  the  spirit  of  tyranny,  to 
say  the  least,  if  not  as  the  most  forbidding  impersona- 
tion of  that  monster.  So  unpopular  is  this  method  of 
taxation,  that  an  aspirant  of  public  station  or  honors 
would  as  soon  think  of  committing  high  treason  as  to 
propose  or.  advocate  it ;  and  if  his  ambition  were  bound- 
ed by  the  present  he  would  be  right,  for  that  could  not 
more  effectually  destroy  his  present  popularity.  How 
this  extreme  hatred  of  a  policy  so  clearlv^right,  has  •'/// 
succeeded  in  taking  such  deep  root  in  the  public  mind,  it 
is  difficult  to  conceive  ;  for  our  people  are  proverbial  for 
their  quickness  to  perceive  and  readiness  to  em-^ 
brace  whatever  tends  to  promote  their  pecuniary  inter-\  '  - 
ests.  Perhaps  the  phenomenon  may  be  accounted  for  in' 
part  by  the  fact  that  the  unjust  manner  in  which  we 
were  taxed  by  Great  Britain,  while  yet  her  colonists,  en- 
gendered in  the  public  mind  a  deep  seated  hatred  of 


222  TAXATION.  [PART  n. 

every  form  of  taxation  ;  and  the  direct  being  its  most 
visible  or  sensible  form,  it  has  been  mistaken  for  the 
wor§L  This  impression  was  strengthened  when  the  most 
unpopular  of  our  Presidents  (the  elder  Adams)  recom- 
mended this  policy,  and  when  the  opposing  political  party, 
seizing  the  occasion  to  profit  by  public  prejudice,  repre- 
sented it  as  the  worst  form  of  tyranny.  But  a  more  pro- 
lific source  of  error  on  this  subject,  and  one  to  which  we 
may  safely  attribute  the  continuance  of  the  prejudice 
against  direct  taxation,  is  to  be  found  in  the  systematic 
efforts  of  those  profitin^fey  the  tribute  incident  to  tariff 
laws,  to  blind  the  public  mind  in  reference  to  the  true 
merits  of  the  two  opposing  methods  of  taxation. 

Happily,  for  the  cause  justice  and  sound  policy,  a 
purer  light  has  at  length  dawned  on  this  subject,  —  a 
light  which  is  now  reflected  and  shed  abroad  by  numerous 
advocates  of  commercial  freedom.  I  have  no  fears  but 
the  chemical  ray,  the  ray  of  truth,  will  soon  take  root  in 
the  public  mind,  and  engender  a  fermentation  which  will 
entirely  divest  it  of  protectionism  and  its  kindred  errors. 

There  are  many  other  false  methods  of  taxation  — 
such  as  taxes  on  income,  on  production,  on  con- 
tracts, and  on  communication.  These  and  others  of 
like  character,  have  long  prevailed  in  Great  Britain,  and 
many  of  them  in  most  of  the  other  nations  of  Europe  ; 
but  since  no  one  of  them  has  been  adopted  to  any  con- 
siderable extent  in  the  United  States,  and  since  also, 
there  can  be  but  one  true  method,  which  I  have  already 
endeavored  to  point  out,  it  appears  to  me  quite  useless  to 
detain  the  reader  with  an  attempted  exposition  of  the 
objections  to  which  those  named  above  are  respectively 
liable. 


CHAP  iv.]  223 


SECTION  2. 

Of  tariff  laws,  considered  as  a  means  of  regulating 
commerce  and  production — with  special  reference  to 
their  internal  consequences. 


Having  shown  the  impolicy  of  tariff  laws,  considered 
simply  as  expedients  of  taxation,  it  now  remains  to 
inquire  whether  their  commercial  attributes  afford  any 
compensating  benefits. 

In  entering  upon  this  investigation,  it  is  necessary  that 
we  consider  the  commercial  world  as  divided  into  national 
sections,  and  the  commodities  consumed  by  each  nation 
as  divided  into  two  classes — namely  :  the  one  consisting 
of  the  commodities  produced  at  home,  the  other  of  those 
imported  from  abroad.  Tariff  laws  subject  the  latter  to 
a  tax  from  which  the  former  are  exempt.  In  doing  this 
they  confer  on  the  home  producer  an  advantage  over  his 
foreign  competitor,  which  necessarily  restrains  external 
commerce,  and  developes  the  home  production  of  com- 
modities similar  to  those  which,  but  for  these  laws,  would 
be  brought  from  abroad.  It  is  conceded  on  all  hands, 
that  these  are  the  natural  and  unavoidable  consequences 
of  the  laws  we  are  considering.  In  fact,  the  tariff  or 
restrictive  policy  has  been  established  with  the  avowed 
design  of  securing  these  ends.  In  the  estimation  of  the 
advocates  of  that  policy  in  the  United  States,  the 
suppression  of  foreign  commerce,  and  the  stimulation 
of  feebler  interests  at  home,  are  among  the  most  useful 
offices  if  not  the  most  imperatice  duties  of  government. 
With  the  view  of  making  converts  to  their  theory,  or 


224  PROTECTIVE    TARIFFS.  [PART    II. 

perhaps  with  the  design  of  impressing  on  the  minds  of 
others  a  conviction  of  their  own  sincerity,  they  have 
christened  the  policy  "  Protection  to  home  Industry  and 
home  Products."  The  name  is  captivating,  certainly, 
but  we  shall  find  it  to  be  altogether  deceptive. 

Such  being  the  nature  of  the  commercial  attribute  of 
tariff  laws,  we  will  now  proceed  to  consider  it  under  the 
name  conferred  upon  it  by  its  friends,  though  when 
we  come  to  understand  its  true  character,  we  shall  pro- 
bably be  inclined  to  give  it  a  very  different  one. 

There  have  been  so  many  changes  rung  in  favor 
of  protection,  so  much  of  art  and  sophistry  employed 
to  hide  its  vicious  consequences,  and  to  magnify  its 
pretended  advantages,  that  many  have  been  brought  to 
regard  it  as  the  great  panacea  which  is  to  cure  all  the 
evils  of  the  body  politic.  There  is  so  little  of  truth  in 
these  representations,  and,  in  many  cases,  it  is  to  be 
feared,  so  little  of  honest  conviction  in  the  minds  of 
those  who  make  them,  that  I  feel  eager  to  make  an  onset 
at  their  idol,  and  to  contribute  my  mite  towards  stripping 
it  of  its  disguises. 

I  will  now  proceed  to  analyze  this  boasted  attribute  of 
tariff  laws  ;  a  task  which  is  by  no  means  difficult,  because 
we  shall  find  that  in  its  most  complex  form,  it  consists 
of  only  two  elemental  parts — namely,  Injustice  and 
Folly ;  while,  in  many  cases,  one  or  the  other  of  these 
is  its  only  element. 

Protection  is  simple,  unmitigated  injustice,  when 
it  is  conferred  on  an  interest  which  does  not  need 
its  aid, — on  one  that  would  exist  and  return  remuner- 
ating profits  by  virtue  of  its  own  unaided  merits.  Pro- 
tection to  such  an  interest  is  downright  wrong.  It  robs 
Peter,  not  to  pay  Paul,  but  to  give  to  Jonathan.  To 
establish  justice  is  one  of  the  declared  objects  of  our 


CHAP.    IV.]  PROTECTIVE    TARIFFS.  225 

government — it  is  so  written  in  the  first  line  of  the  pre- 
amble to  our  organic  law ;  and  the  sentiment  is  worthy 
of  standing  as  the  fundamental  maxim  of  all  govern- 
ments. This  sort  of  protection  shamelessly  disregards 
that  maxim  :  for,  in  granting  it,  the  government  in  effect 
says  to  the  consumers  of  the  goods  thus  protected,  c  my 
mandate  is  that  you  either  forego  the  use  of  those  com- 
modities, or  pay  tribute  to  their  producers,  who,  it  is 
true,  are  already  realizing  profits  equal  to  yours,  but  my 
will  is  that  theirs  be  augmented  and  yours  diminished.' 
If  we  ask  for  an  explanation  of  the  motives  which  prompt 
such  wanton  injustice,  no  better  answer  can  be  given 
than  that  revenue  is  the  object,  injustice  the  incident. 
This  is  the  pretext,  not  the  real  motive,  but  if  it  were 
the  latter  it  would  afford  no  justification,  because  the 
objectionable  incident  may  be  readily  avoided  by  chan- 
ging the  method  of  taxation. 

I  might  here  proceed  to  demonstrate  that  a  large 
share  of  the  protection  afforded  by  all  tariff  laws, 
including  our  present  revenue  tariff  as  it  is  called,  is  of 
the  character  just  pointed  out — that  is,  sheer  injustice ; 
but  it  is  unecessary,  because  it  will  be  seen  presently 
that  the  other  element  of  protection  -is  quite  as  bad — nay 
worse,  for  it  is  more  enduring.  The  protection  which 
gives  to  those  who  do  not  need  its  aid,  although  it  has 
neither  justice  or  wisdom  about  it,  has  one  mitigatnig  at- 
tribute :  it  is  short'  lived.  Home  competition  is  its  mor- 
tal enemy  ;  it  never  fails  to  attack  it,  and  sooner  or  later, 
perhaps  after  its  recipients  have  fattened  upon  the  tribute 
of  a  generation  of  consumers,  is  certain  to  kill  it  off.  In 
fact,  it  not  unfrequently  happens  that  the  two  combat- 
ants are  overtaken  by  the  calamity  which  befel  the  Kill- 
kenny  cats — they  eat  each  other  up  ;  or  what  amounts  to 
the  same  thing,  the  protection  is  annihilated  by  the 
20 


226  PROTECTIVE    TARIFFS.  [PART  II. 

eagerness  of  those  who  compete  for  its  bounties,  while  the 
over  production  consequent  thereon  compels  the  latter  to 
disgorge  the  tribute  which  they  had  received,  and  with  it 
their  legitimate  wealth. — The  natural  laws  of  trade  are 
paramount  to  human  enactments  ;  and  according  to  the 
theory  advanced  in  the  first  division  of  this  treatise,  the 
oscillations  of  market  prices,  above  and  below  the  true 
value,  must,  in  all  cases,  ultimately  bring  about  this 
retributive  justice — and  they  do  ;  but  their  movements 
are  sometimes  so  tardy  as  to  permit  the  well  laden  reci- 
pients of  tribute  to  retire  with  their  plunder  before  resti- 
tution is  demanded,  so  that  the  avenging  blow,  instead  of 
falling  upon  them,  strikes  down  the  younger  and  less 
favored  portion  of  their  elass.  And  this  is  the  great 
evil  of  the  species  of  protection  under  consideration,  as 
I  will  now  proceed  to  explain  more  fully. 

We  will  suppose  that  the  protection  afforded  to 
the  cotton  manufacturing  interest  of  the  United  States, 
is  of  this  character, — or  in  other  words,  that  its  profits 
would  be  remunerating  without  any  protection.  I 
do  not  mean  to  say  that  such  is  the  fact,  though  I 
believe  the  assertion  would  be  true ; — I  believe  that  a 
full  and  fair  estimate  of  the  relative  advantages  posses- 
sed by  the  American  fabricant  and  his  European 
competitor,  would  show  that  the  former  are  at  least 
equal  to  the  latter,  especially  with  respect  to  to  the 
American  markets.  The  point,  however,  is  immaterial, 
since  if  the  fact  be  otherwise,  the  protection  afforded 
that  interest  is  of  a  still  more  objectionable  character. 
But  it  is  necessary  that  we  make  the  supposition  in  order 
to  illustrate  this  principle  of  protection. 

Our  present  tariff  levies  a  duty  of  25  per  cent  on  all 
imported  fabrics  of  cotton.  This  affords  protection  to 
the  home  producer  from  foreign  competition  to  that 


CHAP.    IV.]  PROTECTIVE    TARIFFS.  227 

extent;  and  since  there  is  not  produced  a  sufficiency  of 
American  cotton  goods  to  satisfy  the  demand  of  the  home 
market,  their  prices  must  necessarily  be  enhanced  to  the 
full  extent  of  the  duties,  because  the  foreign  fabrics  must 
still  be  imported  to  make  good  the  deficiency,  and  after 
having  paid  the  duty  they  must  still  be  sold  in  competi- 
tion with  the  domestic  article.  Where  an  actual  compe- 
tition exists  in  the  sale  of  two  commodities  of  like  char- 
acter, it  is  scarcely  necessary  to  say  that,  in  proportion 
to  their  respective  qualities  or  values,  their  prices  must 
be  equivalent ;  otherwise,  the  one  would  sell,  the  other 
remain  on  hand. — According  to  our  supposition,  this 
degree  of  protection  gives  undue  profits  to  that  in- 
terest ;  these  undue  profits  attract  fresh  votaries  and 
additional  capital,  until  the  production  exceeds  the 
demand;  then  the  price  sinks  below  the  remunera- 
ting point,  which  consequence,  in  its  turn,  drives  a  portion 
of  the  industry  and  capital  from  this  into  other  pursuits, 
and  so  on.  But  the  vibrations  of  value  in  a  depart- 
ment of  production  like  this,  are  very  slow  in  their  move- 
ments. The  interest  is  large  and  unwieldy ;  its  suc- 
cessful prosecution  requires  large  combinations  of  cap- 
ital with  but  few  proprietors  ;  it  takes  a  long  time 
to  prepare  the  mills  and  machinery;  the  prevailing 
opinion  that  it  would  be  unprofitable  without  pro- 
tection from  foreign  competition,  and  the  chance  like 
uncertainty  of  the  future  policy  of  our  government  in 
this  respect,  render  most  capitalists  exceedingly  cautious 
in  making  investments  in  it;  the  long  time  required, 
even  by  those  engaged  in  it,  to  ascertain  whether  its. 
results  are  profitable  or  otherwise,. and  the  still  greater 
ignorance  of  others  as  to  its  true  results : — These 
considerations,  combined  with  the  certainty  of  its  disas- 
trous isssie  in  periods  of  excessive  competition,  have 


228  PROTECTIVE   TARIFES.  [PART    II. 

retarded  the  naturally  slow  alternations  of  profits  and 
losses  in  this  ponderous  interest;  but  they  will  ulti- 
mately occur  in  defiance  of  all  obstacles.  When  need- 
less protection  is  granted  to  a  slow  moving,  unwieldy 
interest  like  this,  its  tardy  vibrations  ripen  the  injustice 
engendered  by  the  grant,  because  it  enables  one  genera- 
tion of  manufacturers  to  fatten  upon  the  tribute  of  their 
cotemporary  consumers,  while  the  next  generation  of  con- 
sumers grow  rich  upon  the  ruin  of  their  cotemporary 
manufacturers.  Thus  the  wrong  is  accomplished  before 
the  right  interferes,  the  poison  proves  fatal  before  the 
antidote  is  applied. 

This  species  of  protection,  therefore,  notwithstanding  its 
temporary  character,  metes  out  in  practice  about  the 
same  amount  of  injustice  that  would  flow  from  perman- 
ent protection.  They  differ  only  in  character,  not  in 
degree  ;  the  injustice  of  the  former  applying  alternately 
to  two  classes,  that  of  the  latter  always  to  one. 

Let  us  next  examine  the  other  aspect  of  protec- 
tion. When  laws  are  made  to  foster  an  interest  upon 
the  development  of  which  nature  or  circumstances  have 
staniptcd  a  prohibition,  the  tribute  required  and  thus 
given  to  support  it,  is,  simply  and  wholly,  an  offering 
at  the  shrine  of  folly.  While  it  impoverishes  the  con- 
tributor it  does  not  enrich  the  receiver,  but  merely  remun- 
erates him  for  the  productive  service  which  he  wastes  by 
misdirection.  It  is  lost — literally  thrown  away.  It  is 
an  unjust  and  foolish  tax,  extorted  from  every  consumer 
of  the  commodities  thus  produced  ;  and  each  contributor 
might  say  of  the  recipient — and  say  it  with  no  less  truth 
than  force — he 

"  Robs  me  of  that  which  not  enriches  him 
And  makes  me  poor  indeed." 

We  have  but  few  protected  interests  wholly  of  this 


CHAP.    IV.J  PROTECTIVE    TARIFFS.  229 

stamp — possibly  not  one  ;  for  the  authors  of  the  protec- 
tive policy  have  been  careful  to  administer  it  in  doses  so 
large  that  it  rarely  fails  to  betray  the  features  of  its 
other  parent — injustice.  The  sugar  growing  interest, 
however,  approaches  it  very  nearly,  and  I  am  inclined 
to  believe  that  under  the  diminished  protection  of  our 
present  tariff,  it  will  be  found  altogether  of  this  charac- 
ter. Up  to  the  year  1846,  the  cultivation  of  the  sugar 
cane  in  the  United  States  was  protected  by  a  duty  of  2| 
cents  per  Ib.  charged  on  all  imported  sugars.  The  tariff 
of  that  year  reduced  the  duty  to  30  per  cent,  ad  val.  In 
the  West  Indies  we  can  buv  sugars,  equal  in  quality  to 
those  produced  in  Louisiana,  at  2£  cents  the  Ib.,  and  this 
price  is  there  remunerating,  because  the  soil,  the  climate, 
and  the  skill  of  the  cultivators,  all  harmonize  in  their  adap- 
tation to  its  production,  Not  so,  however,  in  Louisiana. 
Adaptation  of  climate  is  there  wanting,  the  plant  being 
a  tender  exotic,  the  life  and  value  of  which  are  both  des- 
troyed by  the  first  frosts  of  autumn,  provided  they  occur 
before  the  plant  matures,  which  often  happens.  In  con- 
sequence of  this  it  requires  4  or  5  cents  per  Ib.  to  re- 
munerate its  producers.  In  other  words,  a  given  amount 
of  land,  capital  and  industry,  in  the  West  Indies,  will 
produce  2  Ibs.  of  sugar,  while  a  like  amount  in  Louis- 
iana will  produce  little  more  than  one  Ib.  Therefore, 
nearly  one  half  of  the  services  of  all  the  land,  capital 
and  industry,  employed  in  that  forced,  hot-bed  cultivation 
in  the  United  States — a  cultivation  which  flourishes,  not 
by  the  genial  warmth  of  the  sun  of  Heaven,  but  by  the 
artificial  smiles  and  favors  of  a  partial  government,  is  un- 
productive, absolutely  thrown  away  and  lost,  unless  that 
interest  is  realizing  undue  profits.  This,  I  think,  is  not 
the  case  to  any  considerable  extent,  if  at  all ;  for  if  we 
take  a  number  of  years  together  on  which  to  base  an 
20* 


230  PROTECTIVE    TARIFFS.  [PART    IT. 

estimate,  we  will  find  that  the  sugar  growers  as  a  class 
have  not  been,  even  under  a  protection  of  2|  cents  per 
lb.,  much  if  any  more  prosperous  than  the  cotton  grow- 
ers, nor  has  the  market  value  of  their  lands,  which  are 
admirably  adapted  to  the  growth  of  cotton,  ranged  much 
higher  than  those  employed  in  the  cultivation  of  that 
plant.  Consequently,  the  diminished  protection  afforded 
by  the  present  tariff  to  the  sugar  interest,  must  leave  the 
business  barely  remunerative. 

If  these  are  the  true  results  of  experience — and  it  is 
within  my  personal  knowledge  that  they  are  nearly  so  ; 
if  these  are  the  only  fruits  that  the  Louisiania  sugar 
planters  have  gathered  from  their  soil,  when  fertilized  by 
a  stream  of  tribute  so  enriching  that  it  nearly  doubles 
the  market  value  of  their  crops,  then  they  stamp  protec- 
tion to  that  interest  with  the  character  I  have  given  it — 
an  oblation  to  folly.  For,  in  virtue  of  this  protection,  a 
large  amount  of  land,  capital  and  industry,  have  been 
directed  into  an  employment  so  unnatural  and  so  unpro- 
ductive that  their  aggregate  results  are  little  more  than 
half  sufficient  to  support  those  engaged  in  it,  the  other 
portion  being  supplied  from  the  surplus  profits  of  other 
branches  of  production,  in  the  shape  of  tribute  from 
every  consumer  of  sugar  in  the  United  States.  The 
protection  to  this  interest  is  not  of  the  alternating  kind, 
but  permanent, — that  is,  it  will  last  as  long  as  the  law 
which  grants  it,  unless  the  production  of  sugar  in  the 
United  States  should  exceed  the  consumption,  which  is 
not  likely  to  occur ;  for  we  have  scarcely  enough  of  soil 
and  climate  adapted  to  the  production  of  sugar  (at  best, 
imperfectly  adapted)  to  yield  the  quantity  required  for 
home  consumption,  even  if  every  acre  of  that  soil  should 
be  simultaneously  cultivated.  This,  it  is  believed,  is 
the  only  productive  interest  of  the  United  States,  worthy 


CHAP.    IT.]  PROTECTIVE  TARIFFS.  231 

of  notice,  which  is  susceptible  of  permanent  protection 
by  taxing  imports,  because,  as  it  respects  all  others, 
undue  profits  would  altimately  stimulate  a  production 
beyond  our  own  wants,  and  thereby  neutralize  the  pro- 
tection. If,  however,  we  have  other  existing  interests, 
the  development  of  which  nature  or  circumstances  had 
interdicted,  but  which  by  the  aid  of  protection  have 
been  hatched  out  and  sustained  merely,  without  being 
made  to  grow  fat,  they  belong  to  this  class. 

But  where  the  degree  of  protection  is  greater  than 
this  ;  where  we  find  these  offspring  of  folly  not  only  fed 
but  clothed  in  golden  garments,  by  means  of  the  tri- 
bute they  receive  from  other  interests,  it  is  proof  that 
they  belong  to  a  third  class,  for  they  betray  the  features 
of  injustice  as  well  as  of  folly :  they  are  compounds  of 
the  two  elements  of  protection.  The  tribute  received 
by  this  class  is  divided  between  the  interests  and 
the  owners.  The  foolish  portion  being  indispensable 
to  the  continued  existence  of  the  former,  is  swallowed 
up  by  it;  the  unjust  portion  passes  into  the  hands  of 
the  latter.  In  illustration  of  this  truth,  let  us  assume 
that  the  sugar  growing  interest,  under  the  tariff  of  1842, 
belonged  to  this  class.  It  then  received  a  protection 
equal  to  100  per  cent.  We  will  suppose  that  50 
per  cent,  would  have  sustained  it,  rendering  its  pro- 
secution as  profitable  as  the  growing  of  cotton  or  any 
other  agricultural  pursuit.  If  this  supposition  be  true, 
it  follows  that  the  tribute  then  received  by  that  interest 
in  virtue  of  the  tariff,  was  equally  divided  between  the 
recipients  named  above.  Here  then  was  a  waste  of  one 
fourth  of  the  productive  means  expended  in  the  cultivation 
of  su^ar  in  the  United  States,  which  was  paid  for,  or 
replaced,  by  one  half  of  the  tribute  received  from  its 
consumers,  leaving  the  other  half  of  the  tribute  to  be 


232  PROTECTIVE    TARIFFS.  [PART   II. 

added  to  the  already  remunerating  profits  of  its  pro- 
ducers. The  one  half  was  sacrificed  at  the  shrine  of 
folly,  and  passed  into  a  nonenity,  while  the  other  half 
was  transferred  from  its  legitimate  owners  to  legalized 
robhers. 

The  friends  of  this  policy  maintain  that  our  protected 
interests  are  mainly  of  the  second  class,  that  the 
tribute  exacted  from  consumers  is  nearly  all  thrown 
away.  I  think  they  are  mistaken.  A  full  knowledge 
of  the  condition  of  the  different  interests  would  pro- 
bably show  that  nearly  all  of  them  belong  either  to'  the 
first  class  or  to  the  third,  and  that  those  which  belong  to 
the  latter  partake  much  more  of  the  nature  of  the  first 
class  than  of  the  second, — in  a  word,  that  there  is  more 
of  knavery  than  of  folly  in  the  system.  It  matters  but 
little,  however,  to  which  class  they  belong,  for  they  are 
all  bad,  though  I  consider  the  first  less  objectionable 
than  either  the  second  or  the  third.  The  first  robs  for 
the  sake  of  the  plunder;  the  second  destroys  from  sheer 
wantonness  or  folly  ;  the  third  destroys  for  the  sake  of 
picking  up  the  fragments.  I  can  see  nothing  to  admire 
in  either.  They  are  all  detestable ;  and  when  we  reflect 
that  the  revenue  attributes  of  tariff  laws  are  of  a  similar 
character,  we  cannot  doubt  that  every  right  minded 
citizen,  when  he  comes  to  understand  the  subject  fully, 
will  raise  his  voice  in  favor  of  an  entire  abandonment  of 
the  restrictive  policy. 

The  foregoing  analysis  of  protection  is  no  fancy  sketch. 
Its  repulsive  features  are  neither  magnified  nor  too 
highly  colored,  nor  does  it  possess  any  redeeming  quali- 
ties which  have  been  overlooked  or  suppressed.  Injus- 
tice and  folly  are  the  only  fruits  which  it  is  capable  of 
yielding.  It  is  a  hateful  exotic,  of  transatlantic  origin, 
which  should  never  have  been  engrafted  on  our  laws.  It . 


CHAP.    IV.]  PROTECTIVE    TARIFFS.  233 

is  fertilized  by  the  toil  and  tribute  of  every  citizen,  while 
folly  and  the  favored  few  who  are  able  to  take  shelter 
under  its  branches,  are  the  only  partakers  of  its  fruit. 
How  strange  that  such  a  principle  should  have  taken  root 
in  a  republic  like  this,  where  all  laws  are  but  the  legalized 
expression  of  the  public  will.  That  it  should  find  favor 
in  Europe,  where  the  few  rule  and  the  many  obey,  is  not 
surprising,  because  in  the  hands  of  the  governing  class 
it  is  a  potent  engine  to  aid  them  in  oppressing  and  rob- 
bing the  governed.  But  that  we  should  have  blindly 
adopted  it  without  discovering  its  antagonism  to  the 
spirit  of  our  political  institutions  ; — that  we  should  have 
voluntarily  fashioned  wTith  our  own  hands  a  legal  wrong 
to  rob  ourselves,  implies  a  delusion — or,  to  speak  more 
plainly — manifests  a  degree  of  ignorance  on  this  sub- 
ject which  it  is  really  mortifying  to  contemplate.  The 
masses  of  Europe  are  not  chargeable  with  like  folly. 
Their  masters  perpetrate  the  wrong,  and  their  submission 
to  it  is  a  matter  of  necessity,  from  which  there  is  no 
escape  except  by  revolution.  In  illustration  of  this  fact, 
let  us  briefly  examine  the  practical  operation  of  protec- 
tion in  Great  Britain,  and  thus  learn  also,  the  motives 
which  have  prompted  that  government  to  pursue  this 
policy. 

.Those  who  have  the  right  of  voting  for  or  otherwise 
choosing  their  rulers,  constitute  the  governing  class  in 
all  nations.  In  the  United  States  this  right  is  enjoyed 
by  nearly  every  adult  male  citizen.  In  Great  Britain  it 
is  in  a  great  measure  confined  to  the  proprietors  of  the 
soil,  with  many  inequalities  in  the  representation  de- 
signed to  strengthen  the  influence  of  this  favored  class. 
The  result  is,  that,  with  the  exception  of  a  few  represen- 
tatives of  cities  and  towns  in  the  house  of  Commons,  the 
government  is  made  up  of  the  representatives  of  the 


234  PROTECTIVE    TARIFFS.  [PART    II. 

landed  interest.  Consequently,  the  landed  proprietors 
of  Great  Britain  constitute  the  governing  class,  to  which 
all  other  classes  and  interests  of  that  nation  are  subser- 
vient. The  men  composing  this  class  are  not  exempt 
from  the  frailties  and  vices  of  human  nature.  They 
love  idleness  and  luxury,  and  they  hate  labor.  They 
are  no  further  mindful  of  justice  than  to  wear  its  man- 
tle ;  and  finding  that  they  have  the  power  in  their  own 
hands,  they  so  shape  their  policy  that  others  are  com- 
pelled to  sow  and  reap  while  they  enjoy  the  fruits.  To 
do  this  openly  might  stagger  the  fealty  of  their  semi- 
vassals  ;  hence  the  adoption  of  the  ingenious  device  of 
Protection.  They  first  established  laws  of  primogeni- 
ture and  entailment,  by  which  the  landed  estates  and 
titles  were  handed  down  to  the  eldest  sons  of  succeeding 
generations.  This  rendered  the  aristocratic  class  per- 
manent, and  protected  it  from  accidental  interlopers. 
They  next  gave  a  large  bounty  on  the  exportation  of 
agricultural  products ;  for  at  that  period  of  the  nation's 
growth,  protection  to  the  landed  interest  by  duties  upon 
imports  would  have  been  inoperative,  because  the  pro- 
ductions of  their  soil  exceeded  the  home  consumptions. 
They  were  then  exporters  of  agricultural  products,  not 
importers.  Consequently,  the  bounty  on  exports  an- 
swered the  aim  of  the  law-givers,  for  it  enhanced  the 
price  of  agricultural  products  consumed  at  home,  to  the 
full  extent  of  the  bounty  paid  on  the  few  that  were 
exported.  They  continued  this  system  for  a  long  time, 
probably  until  the  tributary  class  saw  through  the  dis- 
guise, and,  perceiving  its  unjustice,  became  restive  under 
it ;  or  perhaps  until  the  increased  density  of  population 
compelled  them  to  change  the  system.  The  govern- 
ment then,  in  casting  about  for  some  other  method 
whereby  it  might  better  deceive  the  governed  without 


CHAP.  IV.]  PROTECTIVE    TARIFFS.  235 

diminishing  the  amount  of  tribute  extorted  from  them, 
discovered  that  the  growth  of  the  nation  had  reached  a 
point  where  protection  to  the  landed  interest  would  be 
secured  by  taxing  imports,  the  population  having  become 
so  dense,  and  the  manufacturing  arts  so  far  developed, 
that  the  productions  of  their  own  soil  were  no  longer 
sufficient  to  supply  the  home  demand.  They  then  hit 
upon  a  plan  which  answered  their  purpose  much  better, 
and  the  injustice  of  which  was  so  effectually  disguised 
that  other  interests  did  not  for  a  long  time  perceive  it, 
but  meekly  c  kissed  the  rod  that  scourged  them  ;'  for, 
by  the  plan  adopted,  all  interests  were  ostensibly  put 
upon  an  equal  footing,  high  duties  being  charged  on  all 
imports — on  manufactured  goods  as  well  as  on  produc- 
tions of  the  soil.  But  this  sort  of  protection  to  British 
manufacturers,  like  the  protection  of  our  tariffs  to 
American  farmers,  is  a  perfect  mockery,  because  in  both 
cases  they  are  exporting  interests,  and  consequently 
the  home  prices  of  their  products  are  governed  by  the 
prices  current  in  foreign  markets.  The  fact  was  not, 
however,  at  first  perceived  by  the  tributary  classes. 

At  the  suggestion  of  Burke,  to  whom  the  British 
aristocracy  were  greatly  indebted  for  the  happy  thought, 
they  established  the  admirable  "  Sliding  Scale"  of  du- 
ties on  imported  bread  stuffs.  By  that  incompara- 
ble contrivance,  the  landed  interest  government  of 
Great  Britain  was  enabled  to  secure  to  itself  and  to 
its  constituents,  tribute  from  the  governed  classes  to 
the  precise  extent  of  their  ability  to  pay.  For  exam- 
ple :  If  the  prices  of  bread  stuffs  were  low,  the  duty  ran 
up  to  prohibition;  and,  since  they  did  not  produce 
enough  for  their  own  wants,  the  prices  of  the  domes- 
tic article  must  have  promptly  ascended  the  same  scale. 
When  the  latter  got  so  high  that  starvation  began  to 


236  PROTECTIVE    TARIFFS.  [PART    II. 

pick  off  here  and  there  a  victim,  the  duty  jumped  sud- 
denly down  to  the  very  bottom  of  the  scale.  Then 
foreign  corn  rushed  in,  which,  caused  the  price  to  descend 
also,  and  thereby  stopped  the  inroads  of  starvation. 
Then  the  duty  began  to  re-ascend  the  scale,  with  the  price 
cautiously  following  after  it,  until  again  frightened  down 
by  starvation,  and  so  on.  The  governing  class  thus 
gathered  in  from  the  governed  all  the  tribute  they  could 
spare  and  yet  survive  :  it  robbed  them  of  everything  but 
their  life-blood. 

Such  has  been,  until  very  recently,  the  protective 
policy  of  Great  Britain.  It  was  neither  more  nor  less 
than  a  skilful  expedient  of  the  governing  class,  or  the 
aristocracy,  or  the  proprietors  of  the  soil — the  terms  are 
synonymous — for  exacting  tribute  clandestinely  from  the 
governed.  The  plan  succeeded  admirably.  Unlike 
most  of  the  similar  attempts  that  have  been  made  by  the 
United  States  government,  the  protection  to  British 
land-owners  proved  equal  to  the  rate  of  duties  charged 
on  imported  agricultural  products,  and  as  permanent  as 
the  law  which  granted  it.  These  results  were  inevitable, 
because  the  agricultural  interest  there  was  an  importing, 
not  an  exporting,  interest.  The  products  of  the  British 
soil,  stimulated  and  forced  as  they  had  been  for  a  long 
period  by  this  partial  monopoly  of  the  home  market, 
were,  nevertheless,  unequal  to  the  wants  of  their  own 
population  ;  and  inasmuch  as  the  quantity  of  land  could 
not,  like  the  quantity  of  capital  or  of  industry,  be  en- 
larged by  strengthening  the  demand,  it  follows  that  the 
deficiency  had  to  be  supplied  by  importations  from  abroad. 
These,  after  having  paid  the  duty,  had  to  be  sold  in  com- 
petition with  the  products  of  the  British  soil ;  conse- 
quently, the  market  value  of  the  latter,  as  well  as  that 
of  the  former,  was  enhanced  to  the  full  extent  of  the  duty. 


CHAP.    IV.]  PROTECTIVE    TARIFFS.  237 

The  protection  thus  afforded  to  the  British  land- 
owners, together  with  the  density  of  population  in  that 
kingdom,  carried  up  the  annual  rent  of  lands,  in  Eng- 
land, to  an  average  rate  of  not  less  than  $20  per  acre. 
The  tenantry  have  been  enabled  to  pay  this  prodigious 
rent,  only  by  aid  of  the  artificial  price  received  for  their 
crops,  and  by  confining  their  own  consumptions  within 
the  narrowest  limits  of  absolute  necessity.  They  have 
had  no  participation  in  the  benefits  conferred  on  the 
landed  interest,  but,  on  the  contrary,  have  constituted 
one  section  of  the  tributary  class.  Their  industry  and 
capital,  instead  of  being  protected,  have  been  exposed  to 
the  full  force  of  a  home  competition  rendered  doubly 
intense  by  the  tribute  exacted  from  all  capital  and  all 
industrial  interests,  to  pamper  these  lords  of  the  soil. 

The  restrictive  policy  of  Great  Britain,  then,  whether, 
we  look  at  the  motives  or  the  results,  presents  features  alto- 
gether different  from  those  of  its  namesake  in  the  United 
States.  There,  the  policy  was  established  with  the  two- 
fold object  of  deception  and  plunder ;  and  such  have 
been  its  results,  because  the  political  institutions  of  that 
nation,  combined  with  a  dense  population,  have  favored  the 
unrighteous  design.  Here,  it  has  been  conceived  in  ignor- 
ance prompted  by  injustice,  and  brought  forth  in  folly. 

The  effects  of  this  policy  in  Great  Britain  were  so 
injurious  to  the  masses  that  they  could  not  be  expected 
to  remain  passive  under  it  any  longer  than  they  continued 
ignorant  of  its  real  consequences  ;  and  its  disguises, 
although  wrought  with  exceeding  skill,  and  supported  by 
specious  arguments,  were  at  length  unraveled  by  scien- 
tific inquirers.  Practical  men  of  business  and  politi- 
tians  next  took  up  the  subject,  and  arrayed  themselves 
in  opposition  to  the  policy.  They  formed  themselves 
into  what  they  termed  "the  anti-corn-law  league,' 'with 
21 


238  PROTECTIVE    TARIFFS.  [PART    II. 

the  avowed  determination  of  persisting  in  agitation  and 
discussion  until  the  last  vestige  of  the  policy  should  be 
expunged.  They  soon  made  proselytes  enough  to  awaken 
the  anxiety  of  government.  The  latter,  ever  watchful 
of  the  interests  and  safety  of  its  class,  early  discerned 
the  speck  of  danger ;  and  knowing  full  well  that  the 
spirit  and  tendency  of  the  protective  policy  could  not 
bear  the  light  of  reason  and  free  discussion,  nor  stand 
before  the  frowns  of  offended  justice,  it  came  forward 
promptly,  and  met  the  movement  with  concessions.  It 
did  this,  if  not  before  it  was  asked,  at  least  much  sooner 
than  was  expected  ;  thus  giving  to  a  measure  extorted 
from  the  fears  of  the  aristocracy,  the  appearance  of  a 
cheerful  and  voluntary  concession.  By  that  slight  mod- 
ification of  the  corn-laws,  the  government  hoped  to  break 
•  the  strength  of  the  league,  and  to  arrest  the  agitation  oi 
the  subject.  Its  expectations  were  not  realized,  how- 
ever. The  concession  checked  the  movement,  but  did 
not  stop  it.  After  a  slight  pause  it  again  broke  out  witl 
an  energy  so  intense  that  the  government,  deeming  it  im- 
prudent to  persist  longer  in  a  policy  the  injustice  oi 
which  had  become  apparent  to  the  meanest  understand- 
ing, gave  an  unwilling  assent  to  the  entire  repeal  of  it:; 
corn-laws.  And  the  British  aristocracy  may  considei 
themselves  fortunate  in  getting  rid  of  the  matter  sc 
easily,  for  it  generally  happens  that  the  ultimate  fruits 
of  an  unjust  policy  are  presented  in  bitterness  to  th< 
lips  of  those  who,  for  a  time,  enforced  it  to  their  owi 
profit. 

The  British  government  still  adheres  to  the  tarii 
policy,  as  a  means  of  raising  a  portion  of  its  revenue 
and  perhaps,  also,  in  the  vain  hope  of  countervailing 
the  commercial  policy  of  other  nations ;  but  proteetioi 
to  pet  interests  at  home  no  longer  constitutes  one  of  it« 
features. 


CHAP.  IV.] 


SECTION  3, 

The  same  subject  continued — with  special  reference  to 
external  or  international  consequences. 


Thus  far  in  my  examination  of  the  tariff  policy  of  the 
United  States,  and  of  Great  Britain,  I  have  confined  my 
attention  to  the  direct  consequences  which  each  produces 
at  home.  I  have  shown  that  duties  on  imports  affect 
injuriously  the  productiveness  of  the  capital,  industry 
and  land  of  the  community  wherein  they  are  exacted, 
besides  wronging  the  many  for  the  benefit  of  the  few. 
It  now  remains  to  trace  out  their  external  or  interna- 
tional consequences.  If  there  are  any  useful  properties 
about  them,  they  must  be  found  here. 

As  before  remarked,  the  advocates  of  the  restrictive 
policy  maintain  the  necessity  of  commercial  retaliation. 
In  other  words,  they  maintain  that  when  one  nation 
adopts  the  restrictive  policy,  it  becomes  necessary  that 
all  others  should  .do  the  same  thing,  in  order  to  coun- 
tervail its  effects  on  their  commerce  and  industry.  Why 
so?  In  what  manner  do  the  duties  on  imports,  or  the 
prohibitions  established  by  one  nation,  affect  the  inter- 
ests of  others  1  The  restrictionist  replies — and  it  is  the 
only  plausible  grounds  of  injury  he  can  suggest — c  that 
they  either  diminish  or  entirely  cut  off  the  market  for 
the  exports  of  other  nations ;  that  the  market  prices  of 
these  exports  are  thereby  depressed,  both  at  home  and 
abroad ;  and  hence,  that  their  producers  are,  in  effect,  com- 
pelled to  pay  either  a  part  or  the  whole  of  the  duties.' 
If  this  be  so, — if  any  portion  of  the  duties  charged  by  one 


240  RESTRAINTS    ON  [PART    II. 

nation  on  its  imports  from  others,  is  in  truth  paid,  either 
directly  or  indirectly,  by  the  foreign  producers  or  owners, 
it  establishes  the  necessity  of  countervailing  laws ;  be- 
cause it  proves  that  the  restrictive  policy  is  an  expedient 
by  which  one  nation  may  unlock  the  coffers  of  all  others, 
and  rob  them.  Hence,  all  must  turn  robbers  in  self- 
defence,  or  prohibit  international  commerce  altogether. 

This  opinion  I  will  examine  somewhat  closely.  It  is 
widely  entertained,  and,  if  founded  in  truth,  it  de- 
monstrates the  necessity  of  tariff  laws,  notwithstanding 
the  serious  objections  to  which  they  are  liable  in  other 
respects.  If,  on  the  contrary,  the  opinion  is  erroneous  ; — 
if,  as  I  will  endeavor  to  show,  it  has  not  a  particle  of 
reason  or  truth  to  support  it,  then  we  must  conclude  that 
the  whole  restrictive  policy  is  a  compound  of  evils,  and 
that  nothing  but  good  could  result  from  its  abandonment. 
We  must  conclude  also,  that  isolated,  single-handed 
Free  Trade  is  practicable, — that  our  government,  or 
any  other  government,  might  safely  abolish  its  tariff 
laws  without  regard  to  the  course  pursued  by  all  other 
nations. 

In  order  that  my  examination  of  the  external  effects 
of  tariff  laws  may  partake  more  of  the  practical  than 
of  the   speculative,   I   will   base   my  remarks  on   the 
operations  of  our  existing  tariff. — The  first  inquiry   is, 
do  we,  in  virtue  of  our  tariff,  purchase  from  their  foreign 
producers  or  owners,   the  commodities  constituting  our " 
imports,  at  cheaper  rates  than  we  could  purchase  them, 
without  it  7     In  answering  this  question,  I  readily  admit 
that  the  charging  of  duties  lessens  the  amount  of  impor- 
tations.    This  may  not  be  an  invariable   consequence,, 
but  it  is   a  legitimate  one  ;    because,  in  virtue  of  the  • 
protection  afforded  by  these  duties  to  such  of  our  home- 
interests  as  come  into  competition  with  imports,  their 


CHAP  IV.]  INTERNATIONAL    COMMERCE.  241 

productiveness  is  stimulated  and  increased,  while  the 
gross    amount   of  consumptions   is    diminished   by   the 
enhancement  of  prices.    The  principle  therefore  is  sound,  « 
and  I  adopt  it  as  such.     This,  then,  is  the  general  exter-  • 
nal  attribute  of  our  tariff,  and  it  is  the  only  one  belong- 
ing to  it  that  can  have  the  remotest   effect  on  prices  in  , 
the  foreign  market.     Will  this  disturb  them  ?     Will  it  • 
depress  them  ?     To  determine  these  questions  it  will  be  • 
necessary  to  come  down  to  particulars.     We  must  take . 
a  single  class  of  foreign  commodities,  or  a  single  foreign  • 
interest,    examine   the   bearing   of  our   tariff  upon  it, , 
then  apply  the  natural   laws  of  trade,   and  from  these  , 
premises  deduce  the  ulterior  consequences. 

First,  then,  let  us  examine  the  effect  of  our  tariff  on  • 
the  price  of  sugars   in  the   foreign   market.     It   meets  < 
their  importation  into  the  United  States  with  a  high  duty,* 
say  30  per  cent.     It  is  not  contended  that  we,  in  virtue  of  . 
this  duty,  can  go  to  the  West  Indies  and  buy  sugars  cheaper 
than  those  who  purchase  for  free  markets.     Therefore, 
if  our  tariff  depresses   the  price  of  sugar   in  any   one 
market,  it  does  so  in  all,  and  equally  in  all.     If  the  doc-, 
trine  of  the  restrictionists  were  true,  it  would  prove  that, 
our  tariff  benefits  all  foreign  consumers  of  sugar  as  much  "7S" 
as  it  does  our  own,  and  that  the  consumers  of  sugar  every- . 
where,  owe  lasting  gratitude  to  Great  Britain  for  having 
taxed  its  importation  so  enormously. — But  let  us  return 
to  the  main  question  :    Does  our  tariff  depress  the  price 
of  sugars  in  the  foreign  market  ?    When  first  established, 
it  must,  by   increasing  the  price  in  our  markets,  have 
diminished  the  consumption  in  the  United  States,  and 
consequently  the  demand  in  the  exporting  markets.     The 
diminished  demand  must,  at  first,  have   caused  an  over 
supply,  and  therefore  a  lower  price  in  those  markets. 
The  reduction  of  price  renders  the  business  unprofita- 

ctftL 


242  RESTRAINTS    ON  [PART    II. 

ble,  which  drives  a  portion  of  the  capital  and  industry 
from  the  production  of  sugar  into  other  parsuits.  This, 
in  its  turn,  lessens  the  supply,  and  thereby  enhances 
the  price,  until  it  reaches  a  point  nearly  as  far  above  the 
natural  standard  as  the  tariff  had  at  first  driven  it  be- 
low ;  then  fresh  capital  and  industry  return  to  its  pro- 
duction, and  so  on.  Thus,  every  legal  disturbance  of 
prices,  which  does  not  partake  of  the  nature  of  mono- 
poly, may  be  likened  to  a  blow  which  knocks  the  pendu- 
lum from  its  gravitating  rest :  both  will  vibrate,  equally 
on  either  side  of  the  centre,  until  they  again  find  their 
natural  position.  We  have  only  to  admit  that  self- 
interest  presides  over  and  directs  the  employment  of  the 
productive  forces,  and  there  is  no  escape  from  this  con- 
clusion. 

Again  :  We  tax  the  woollen  and  cotton  fabrics,  impor- 
ted from  Great  Britain,  with  a  duty  of  20  to  30  per  cent. 
Other  nations  may  admit  them  free,  or  upon  the  pay- 
ment of  a  much  lighter  duty  than  we  charge.  We  can 
buy  them  from  the  British  manufacturers  no  cheaper 
than  they.  But,  by  reason  of  our  tariff,  we  buy  from 
them  less  of  these  articles,  which  diminishes  the  aggre- 
gate demand  for  them,  and  hence,  it  is  contended, 
lowers  their  price.  We  will  assume,  for  the  purpose 
of  illustration,  that  our  tariff  lessens  by  25  per  cent., 
our  importations  of  these  fabrics  of  Britain,  and  we 
will  suppose  that  we  still  take  the  25th  part  of  the 
productions  of  her  looms,  which,  by  the  way,  is  a 
large  estimate.  Our  tariff  then  cuts  off  or  destroys, 
one  per  cent,  of  the  demand  for  cotton  and  woollen  fa- 
brics in  the  British  market.  If  there  should  be  no 
other  disturbing  cause  operating  on  that  market  at  the 
same  time,  it  would  be  at  first  sensibly  depressed  even 
by  this  pebble ;  but  it  would  be  only  for  the  moment. 


CHAP.    IV. J         INTERNATIONAL    COMMERCE.  243 

The  manufacturers  would  at  once  shorten  the  per  diem 
time  of  running  their  machinery,  this  being  their  uni- 
form method  of  meeting  and  counteracting  every  depres- 
sion of  the  market ;  for  they  dare  not,  it  would  seem, 
lower  the  wages  of  the  operatives  for  fear  of  producing 
riots  and  the  destruction  of  their  mills.  The  supply  is 
thus  diminished,  the  price  enhanced,  and  the  equilibrium 
ultimately  restored.  Therefore,  what  we  gain  by  the  first 
dip  of  prices  below  their  natural  level,  we  lose  by  their 
ensuing  elevation  above  it.  It  is  thus  with  every  other 
class  of  imported  commodities  :  we  buy  them  no  cheaper, 
on  the  average,  in  consequence  of  our  tariff.  This  fact 
will  be  readily  perceived,  without  farther  illustration,  by 
all  who  coincide  with  the  views  which  I  have  advanced 
touching  the  laws  of  trade.  There  is  then  no  virtue  here. 
But  this  does  not  entirely  dispose  of  the  question. 
We  must  go  one  step  farther  in  the  investigation,  before 
we  can  determine  the  amount  of  foreign  influence  belong- 
ing to  our  tariff. — We  have  seen  that  the  profits  of  pro- 
duction bear  an  inverse  ratio  to  the  amount  of  capital 
and  industry,  as  compared  with  the  quantity  of  land  or 
natural  wealth, — in  other  words,  that  profits  are  in 
the  inverse  ratio  of  the  density  of  population.  Con- 
sequently, every  community  or  nation  has  a  natural 
standard  of  profits  peculiar  to  itself.  These  standards 
are  established  by  the  natural  laws  of  trade,  and  grad- 
uated to  a  scale  which  indicates  the  density  of  popula- 
tion when  estimated,  not  by  the  quantity  of  land,  but  by 
its  productive  capacity,  as  compounded  of  its  extent,  fer- 
tility, and  other  natural  advantages.  Where  population 
is  dense  in  comparison  with  the  amount  of  natural  wealth — 
as  in  Great  Britain  and  most  other  European  states — the 
standard  of  profits  is  low  ;  where  population  is  sparce 
and  natural  wealth  abundant,  as  in  the  United  States, 


244  RESTRAINTS    ON  [PART    II, 

the  standard  of  profits  is  high.  The  migration  of  cap- 
ital and  industry,  from  places  where  natural  wealth  is 
relatively  scarce  to  others  where  it  is  more  abundant, 
together  with  other  natural  causes,  are  slowly  but  surely 
approximating,  to  a  common  standard,  the  profits  of  pro- 
duction throughout  the  civilized  world.  At  present 
however,  they  are  known  to  be  very  diverse,  ranging  in 
the  different  nations  from  2^  per  cent,  per  annum  to  6 
per  cent.  Now  it  is  obvious  that  there  are  only  two 
ways  in  which  the  various  national  standards  of  profit 
can  have  any  influence  on  each  other — namely :  either 
by  the  migration  of  industry  and  capital  from  one  nation 
to  another,  or  by  international  commerce.  That  the 
first  has  such  an  influence,  that  it  tends  to  equalize  pro- 
fits in  the  different  nations,  is  sufficiently  clear ;  but  the 
question  we  have  now  to  determine  is,  whether  interna- 
tional commerce  affects  them,  and  if  so,  whether  the 
effects  of  tariff  laws,  on  international  commerce,  tends  to 
increase  or  in  any  wise  alter  that  influence  7  Or  the 
question  may  be  stated  more  distinctly,  thus  :  does  inter- 
national commerce  affect  the  profits  of  production — and  if 
so,  what  is  the  bearing  of  tariff  laws  on  profits  abroad  ? 
The  first  clause  of  the  inquiry  must  be  answered  in  the  affir  - 
mative,  for  the  general  reasons  already  adduced  in  evi- 
dence of  the  utility  of  this  arm  of  commerce.  Besides, 
it  is  known  that  there  are  some  nations  of  Europe  which 
could  not  support  their  present  amount  of  population, 
without  exchanging  with  other  nations  the  products  of 
art  for  those  of  the  soil.  Their  profits  are  increased  by 
exchanging  things  which  they  can  produce  cheaper  than 
others  for  such  things  as  others  can  produce  cheaper  than 
they.  The  desire  of  enlarging  profits  is  in  fact  the 
mainspring  of  commerce,  but  for  which  desire  it  would 
not  exist.  The  extent  to  which  exchanges  can  be  made 


CHAP.    IV.J         INTERNATIONAL    COMMERCE.  245 

with  profit,  is  the  legitimate  boundry  of  commerce :  thus 
far  and  no  farther  it  would  be  carried,  but  for  the  foolish 
restrictions  that  have  been  placed  upon  it. 

In  reference  to  the  second  division  of  the  inquiry,  it 
is  to  be  remarked  that  tariff  laws  (or  to  return  to  the 
specific  law  under  consideration,)  our  tariff  in  some 
degree  diminishes  international  commerce.  It  prevents 
other  nations  from  selling  us  as  many  of  the  things 
which  they  can  produce  cheaper  than  we,  and  from 
buying  of  us  many  of  the  things  which  we  can  produce 
cheaper  than  they,  as  they  would  do  but  for  the  hin- 
drances which  it  interposes.  It  therefore  slightly  "dimin- 
ishes their  profits.  It  does  this  by  forcing  from  the 
beating  track  to  wealth,  a  small  portion  of  their  produc- 
tive forces,  diverting  them  into  new  channels  less  adapted 
by  nature  and  circumstances  to  their  profitable  employ- 
ment ;  from  which  it  will  be  perceived  that  their  profits 
are  diminished,  not  by  lowering  the  market  price  of 
their  product s,  but  by  enhancing  the  cost.  Therefore, 
while  they  are  injured  we  are  not  benefited,  for  we  can 
buy  their  commodities  no  cheaper.  The  diversion  of 
the  productive  forces,  and  consequent  diminution  of  pro- 
fits, resulting  to  other  nations  from  the  effects  of  our 
tariff,  are  so  slight  that  they  are  neither  seen  nor  felt 
after  the  oscillations  produced  by  the  first  shock  have 
subsided ;  and  when  compared  with  the  diversion  and 
consequent  injury  inflicted  on  our  own  productive  interests, 
they  shrink  into  nothingness  almost.  The  law  under 
consideration  throws  much  of  our  industry  and  capital 
off  the  track,  and  thereby  lessens  in  a  large  degree 
their  productiveness,  the  loss  of  which  is  all  our  own, 
because  we  are  not  only  owners  but  underwriters,  in- 
asmuch as  we  comsume  the  commodities  produced  thus 
in  violation  of  the  natural  laws  of  trade. — There  is  then 


240  RESTRAINTS    ON  [PART  II. 

no  virtue  here,  unless  the  wasting  much  of  our  own  pro- 
tive  energies  for  the  sake  of  causing  other  nations  to 
waste  a  little  of  theirs  may  be  regarded  as  such,  and  I 
am  unwilling  to  believe  that  the  most  ultra  advocate  of 
retaliatory  tariffs  would  so  consider  it. 

But  there  is  yet  another  important  question  connected 
with  this   branch  of  our  subject,  and  it  is  one  the  con- 
sideration of  which  I  approach  with  diffidence, — not  that 
I  entertain  any  doubts  as  to  what  should  be  the  char- 
acter and  import  of  a  legitimate  answer   to  it,  but  be- 
cause its  truth  lies  buried  so  deep  that  it  is  to  be  feared 
1  do  not  possess  the  requisite  skill  to  bring  it  to  the  light. 
Its   nature   and   importance  are  shadowed  forth  in  the 
questions  so  frequently  asked :  What  should  we  do  with 
all  our  agricultural  products  if  we  were  to  abandon  the 
policy  of  protecting  our  manufactures  ?     Where  would 
we  find  markets  sufficient  to  absorb  the  whole  of  them  ? 
How  should  we  obtain  the  means  of  paying  for  our  im- 
portations, which,  under  the  Free  Trade  policy,  would  be 
so  greatly  augmented  1     These  are  important  questions 
I   admit,    and   such   as   require   satisfactory    answers. 
They  are  based  on  the  assumption  that  our  tariff  en- 
j  /  \    hances  the  prices  of  our  agricultural  products  both  at  home 
and  abroad ;  or,  what  amounts  to  the  same  thing,  that 
its  repeal  would  lessen  those  prices.     They  have  nothing 
else  to  support  them.     If,  therefore,  the  assumption  be 
unsound, — if  it  can  be  demonstrated  that  it  has  neither 
reason  nor  truth  to  rest  upon,  and  that,  in  point  of  fact, 
while  the  tariff  fails  to  enhance  the  prices  of  our  agri- 
cultural products,  either  at  home  or   abroad,  it  actually 
increases  their  cost — then  the  questions  will  have  recei- 
ved satisfactory  answers,  and  the  last  and  deepest  foun- 
dation stone  on   which  the  whole   restrictive  policy  has 
been  made  to  rest,  will  have  been  removed. 


CHAP.    IV.]       INTERNATIONAL    COMMERCE.  147 

Does  our  tariff  enhance  the  prices,  either  at  home  or 
abroad,  of  that  portion  of  our  agricultural  products  des- 
tined or  fitted  for  exportation  1     Let  us  examine  this 
question   carefully,  and   with  all   fairness.     The   duty 
charged  on  similar   articles  imported   from   abroad,  is 
inoperative  of  course,  since   there  is  no  importation  of 
them  except  under  an  unnatural  state  of  the  market  ; 
nor  would  there  be  without  the  duty,  because  the  agri- 
cultural is  our  paramount  or  exporting  interest.     This 
portion  of  our  tariff  is  therefore  a  dead  letter,    a  use- 
less incumbrance  on  the  statute-book,  and  was  put  therev^L 
doubtless,  for  the  sole  purpose  of  blinding  our  agricul- 
turists to  the   rank   injustice   done  them  by  other  por- 
tions of  the  same  law.     I  have  already  stated  that  the 
foreign  demand  governs  the  home  market  price  of  expor- 
table commodities,  and  the  remark  applies  not  only  to 
the  portion  actually  exported,  but  to  those  consumed  at 
home,  as  well.     This,  as  a  general  principle  of  trade,  is 
sufficiently  familiar.     Any  one  at  all  acquainted  with  the 
practical  operations  of  commerce,  knows  that,  as  relates 
to  this  class  of  commodities,  the  foreign  demand  is  the 
controlling  one,  and  that  the  home  market  prices  of  the 
products  of  our  soil  (all,  save  sugar  and  wool  of  which 
we  consume  more  than  we  produce)  usually  conform  to 
their  respective  values  in  the  foreign  market.     But  we 
must  remember   that  the  power   of  demand   (whether 
foreign  or  domestic)  over  prices,  is  not  omnipotent.     Un- 
der the  existing  circumstances  of  a  market  its  control 
of  prices  will  be  absolute  at  any   given  moment  ;  over 
those  circumstances  it  has  no  control,  for   they  are  the 
offspring   of  that   primary  law   of  prices  which  is  the 
joint  efiect   of  the   desire   of  happiness  and   the  desire 
of    gain,   and   of  which   supply   and    demand   are   but 
secondary  agencies.     For  example  :  whenever  the  de- 


A^ 


<U      J     ^ 


248  RESTRAINTS    ON  [PART    II. 

mand,  operating  on  the  existing  circumstances  of  a 
market,  brings  the  current  price  of  a  given  commodity 
either  above  or  below  its  true  value,  self-interest,  whose 
slightest  promptings  are  always  obeyed,  at  once  issues 
her  mandate  that  the  circumstances  be  so  changed  as  to 
send  back  the  price  to  its  point  of  equilibrium,  the  true 
value.  In  this  process  the  desire  of  happiness,  acting 
on  the  supply,  also  concurs ;  all  of  which  has  been  suffi- 
ciently illustrated  in  a  former  chapter. 

We  find  then  that  the  only  permanent  influence  which 
our  tariff  can  possibly  have  on  the  prices  of  products 
of  our  soil,  must  be  in  affecting  either  their  foreign 
market  value  or  the  cost  of  their  production,  or  rather, 
their  remunerating  price  at  home.  Let  us  first  trace 
out  its  influence  on  their  value  in  the  foreign  market. 

It  is  alletlged  that,  but  for  the  protection  to  our  manu- 
factures, the  productions  of  our  soil  would  be  much 
greater  than  at  present,  and  their  home  consumption 
much  less  ;  and  hence,  that  the  repeal  of  the  tariff  would 
throw  them  on  the  foreign  markets  in  quantities  so  largely 
increased  that  their  price  in  those  markets  must  neces- 
sarily be  much  depressed.  It  is  believed  that  the  sinis- 
ter motives  of  some,  and  the  excited  imaginations  of 
others,  have  greatly  magnified  this  apprehended  effect ; 
but  I  admit  the  soundness  of  the  priciple,  and  will  there- 
fore suppose  that  in  case  our  tariff  should  be  suddenly 
and  totally  abolished,  which,  by  the  way,  no  prudent 
statesman  would  ever  propose,  the  first  effect  on  the  prices 
of  our  agricultural  products  abroad,  would  be  a  depres- 
sion. It  would  not  disable  foreign  consumers  from  pay- 
ing the  same  price  for  them  that  they  had  paid  previ- 
ously— on  the  contrary,  their  ability  to  purchase  them 
would  be  slightly  increased  in  consequence  of  our  en- 
larged purchases  from  them, — but  it  would  cause  the 


CHAP.    IV.]         INTERNATIONAL    COMMERCE.  249 

supply  to  exceed  the  demand,  and  thus  throw  a  surplus 
on  the  market.  The  immediate  consequence  would  be, 
a  settling  of  the  price  of  agricultural  products  below 
their  true  value ;  then  a  reaction,  brought  about  in  the 
manner  and  by  the  influences  so  frequently  pointed  out, 
would  ensue  ;  and  finally,  after  a  series  of  oscillations, 
the  price  would  return  to  the  point  from  which  it  was 
first  driven  ;  for  proof  of  which,  the  reader  is  referred 
to  the  chapter  on  the  laws  of  trade.  It  appears, 
therefore,  that  tariff  laws  do  not  permanently  affect  the 
price  of  exports  in  the  foreign  market.  Consequently, 
the  only  way  in  which  the  tariff  under  consideration  can 
possibly  benefit  our  agriculturists,  is  in  its  effects  on 
the  remunerating  price  of  their  products  at  home — in 
other  words,  by  diminishing  the  cost  of  those  products. 
This  last  hidden  refuge  of  the  pretented  benefits  of  the 
tariff  policy,  we  will  now  explore. 

Let  me  first  repeat  that  every  nation  has  a  standard 
of  profits  peculiar  to  itself.  The  remunerating  price  of 
every  class  and  variety  of  valuable  products,  is  made  up 
of  the  cost  of  production  added  to  the  standard  rate  of 
profit  in  that  community  in  which  they  are  produ- 
ced. Thus,  for  instance,  the  net  profits  of  produc- 
tion in  the  United  States,  as  indicated  by  the  interest 
of  money,  (less  the  risk  of  loss,  and  taxes)  is  about  6 
per  cent,  per  annum.  Around  this  national  standard 
the  profits  of  all  interests,  and  of  all  departments  of  pro- 
duction, centre  ;  and  in  order  that  they  may  do  so,  it  is 
manifestly  necessary  that  the  remunerating  price  of  all 
classes  of  commodities  must  conform  to  a  corresponding 
standard.  In  Great  Britain  the  national  standard  of  pro- 
fits is  about  2-j-  per  cent,  per  annum  ;  around  which  stand- 
ard, all  the  productive  interests  of  that  nation  centre. 
And  it  is  thus  with  all  other  nations.  Now,  if  any  given  na- 
22 

uU 


250  RESTRAINTS    ON  [PART    II. 

tion  pass  a  law  which  exacts  tribute  from  one  interest  for 
the  benefit  of  another,  it  will  at  first  depress  the  profits  of 
the  one  and  elevate  those  of  the  other,  equally,  below  and 
above  this  common  standard,  without  disturbing  the  stand- 
ard itself;  and  the  laws  of  trade,  provided  no  natural  ob- 
stacles intervene,  will,  through  the  agency  of  home  com- 
petition, ultimately  bring  the  profits  of  both  interests  back 
to  it.     But  a  law  which  exacts  tribute  from  one  or  more 
interests,  merely  to  bring  another  into  existance,  will  de- 
press the  profits  of  the  former  below  the  standard  without 
elevating  those  of  the  latter  above  it ;  and  inasmuch  as 
the  laws  of  trade  will  bring  about  an  ultimate  reunion  of 
the  depressed  interests  with  the  standard  of  profits,  and 
there  being  in  this  case  no  elevated  interest  to  aid  in  its 
accomplishment,  it  follows  that  the  depressed  interests  will 
have  to  be  raised  by  lowering  the  national  standard  of 
profits.     Such,  in  the  opinion  of  its  friends,  is  the  char- 
acter  of  our  tariff;  for  they  maintain  that  it  confers 
on  the  manufacturer  no   more   than  remunerating  pro- 
fits,  notwithstanding  the  oppressive  tribute  it  extorts, 
for  his  benefit,  from  the  agricultural  and  other  interests, — 
indeed,  they  affirm  that  his  profits  are  below  the  average, 
or  national  standard.     The   tribute,    then,  goes  to   pay 
for  productive  services   wasted  by  misdirection.     The 
tariff  must  therefore  lessen,  to  the  extent  of  the  tribute, 
($100,000,000  annually)  the  aggregate  profits  of  pro- 
duction in  the   United  States ;  which,   if  we  estimate 
that  aggregate  at  $2,000,000,000  anrually,  shows  aeon- 
sequent  depression  of  the  national   standard  of  profits, 
equal  to  5  per  cent.,   or    j\  of  the  whole.     And   since 
the  laws  of  trade   ultimately   bring  all   interests  of  a 
given  nation  to  share  alike  in   their  degree  of  profit,   it 
follows  that  the  profits  of  our  agriculture  are  diminished 
by  the  tariff;  and  that  this  is  effected,  not  by  lowering 


CHAP.    IV.]       INTERNATIONAL    COMMERCE.  251 

the  price  of  its  products,  but  by  increasing  their  cost. 
The  standard  price  is  neither  elevated  nor  depressed  ; 
there  is  more  of  cost  and  less  of  profit  in  its  elementary 
parts,  but  the  sum  of  the  two  remains  the  same.  There 
is  then  no  virtue  here,  but  on  the  contrary  much  mis- 
chief; for  while  the  tariff  utterly  fails  to  elevate  the 
price  of  exportable  commodities,  it  greatly  increases 
their  cost,  and  in  an  equal  degree  diminishes  the  profits 
of  their  producers. 

If,  however,  the  friends  of  this  policy  are  mistaken  as 
to  its  effects  on  the  protected  interests ;  if  the  tribute 
which  it  awards  to  the  latter,  instead  of  merely  elevating 
their  profits  to  a  level  with  those  of  other  interests,  does 
in  truth  carry  them  much  higher,  then  the  ultimate  con- 
sequences will  be  somewhat  different  from  those  just 
pointed  out.  In  that  case,  the  foolish  portion  of  the 
tribute — the  portion  which  goes  to  pay  for  productive 
services  wasted  by  misdirection — will,  to  that  extent, 
lower  the  national  standard  of  profits,  by  transforming 
profits  into  cost ;  but  the  unjust  portion — that  which 
goes  to  fill  the  pockets  of  the  protected  class  with  undue 
profits — while  it  at  first  elevates  the  profits  of  the  pro- 
tected class  above  the  national  standard,  and  in  the  same 
degree  depresses  those  of  the  exporting  or  tributary 
class  below  it,  will  be  ultimately  neutralized  and  ren- 
dered of  no  effect  by  the  force  of  home  competition. 

I  might  here  dismiss  the  topics  embraced  in  the  sub- 
ject of  this  section,  and  pass  to  the  consideration  of 
others ;  for  I  trust  enough  has  been  said  to  demonstrate 
the  impolicy  of  tariff  laws,  whether  regarded  as  a  method 
of  raising  revenue,  a  means  of  fostering  illegitimate 
home  interests,  or  as  an  expedient  of  protection  from  the 
aggressive  policy  of  foreign  nations.  The  practical 
importance  of  the  subject,  however,  induces  me  to  ask 


252  RESTRAINTS    ON  [PART    II. 

the   reader's    attention   "while   I    attempt   to   illustrate 
one  point,  more  fully  than  has  yet  heen  done. 

We  found  that  the  only  external  influence  of  tariff 
laws  is,  to  injure  other  nations  :  and  I  remarked  at  the 
time  that  even  this  is  scarcely  appreciable.  I  will  now 
endeavor  to  prove  the  correctness  of  that  remark. 

I  will  take  a  strong  case,  the  strongest  which  the 
whole  tariff  policy  has  presented — the  late  corn  laws  of 
Great  Britain — and  inquire  how,  and  in  what  degree, 
they  injured  our  growers  of  wheat.  These  laws  sensihly 
diminished  the  consumption  of  flour  in  that  nation. 
They  did  this  by  a  twofold  influence  :  they  enhanced  its 
price,  and  at  the  same  time  took  from  the  masses  a  por- 
tion of  their  means  of  purchase ;  thus  giving  them,  as  it 
were,  a  sort  of  locked-jaw,  which  prevented  the  admission 
of  wheaten  bread  except  in  homeopathic  doses.  They 
were  therefore  compelled  to  substitute  some  cheaper 
materials,  say  oatmeal  and  potatoes. 

As  before  remarked,  these  laws  enhanced  the  prices 
in  the  British  market,  of  both  domestic  and  foreign 
flour ;  of  the  domestic,  because  they  produce  less  than 
they  consume;  of  the  foreign,  because  they  could  not 
purchase  it  without  paying,  over  and  above  the  duty 
charged,  as  much  as  it  would  command  in  any  free 
market. 

But  the  existence  of  these  laws  lessened  the  aggregate 
consumption  of  wheat  in  the  commercial  world,  say  one 
per  cent.,  or  ten  per  cent.,  for  it  does  not  matter  which. 
This  lessened  the  aggregate  demand  for  that  product, 
and  consequently,  at  first  depressed  its  market  price, 
which  drove  a  portion  of  the  industry,  capital  and  land 
into  other  employments — say  into  the  culture  of  potatoes 
and  oats,  for  which  there  was  an  improved  demand. 
This,  in  its  turn,  diminished  the  supply  of  wheat,  and 


CHAP.    IV.]          INTERNATIONAL    COMMERCE.  253 

enhanced  its  market  price  ;  but  after  a  few  lessening 
vibrations,  of  equal  extent  on  either  side,  the  market 
price  must  have  returned  to  the  standard  of  true  value. 
Did  these  laws  lower  that  standard  ?  I  have  shown  in 
another  place,  that  such  cannot  be  the  effect  of  tariff 
laws.  But  they  slightly  changed  the  proportion  of  its 
elements  ;  they  enlarged  the  cost  portion  of  the  value  of 
wheat  and  lessened  its  profit  element,  by  which  means 
they  injured  our  growers  of  that  product.  And  how 
did  the  British  corn-laws  produce  this  effect  ?  I  answer, 
by  slightly  diminishing  our  vent  for  wheat.  I  say  slight- 
ly, because  it  must  be  remembered  that  the  gross  dimin- 
ution of  demand,  caused  by  these  laws,  was  diffused 
throughout  the  wheat  markets  of  the  world ;  whence  it  is 
evident  that  our  share  must  have  been  almost  inappre- 
ciable. By  this  contraction  of  the  wheat  market,  a 
fraction  of  the  industry,  capital  and  land  of  the  United 
States,  was  driven  from  the  culture  of  that  plant  into 
employments  for  which  they  were  not  quite  so  well  adap  - 
ted.  Our  remaining  wheat  growers  were  thereby  com- 
pelled to  pay  a  trifle  more  for  their  necessary  supplies, 
which,  to  that  extent,  increased  the  cost  and  diminished 
the  profits  of  their  vocation.  The  degree  of  injury 
was  inconceivably  small.  Its  gross  annual  amount  was 
probably  less  than  the  one  hundredth  part  of  that  which 
our  own  tariff  inflicts  on  them  in  the  same  length  of 
time  ;  for  the  only  way  in  which  these  corn  laws  did,  or 
possibly  could,  affect  injuriously  the  interests  of  other 
nations,  was  by  misdirecting  their  productive  energies  ; 
and  that  could  only  be  to  the  extent  to  which  they  dimin- 
ished their  commerce  with  Great  Britain.  Besides,  the 
misdirection  which  they  caused  was  so  slight  in  degree 
that  it  failed  to  produce  serious  mischiefs.  They  forced 
a  part  of  our  commerce  with  Great  Britain,  and  a  part 
22* 


254  RESTRAINTS    ON  [PART  II. 

of  our  wheat  growing  interest,  off  the  natural  and  most 
direct  paths  to  wealth,  but  they  left  them  perfectly  free 
to  choose  the  next  best  roads ;  and  in  a  country  like  this, 
where  the  elements  of  wealth  in  an  undeveloped  form  so 
greatly  abound,  there  are  so  many  good  ones  that  it  is 
difficult  to  determine  which  is  really  the  best.  With 
regard  to  our  own  tariif  laws  the  case  is  widely  different. 
They  entice  a  part  of  our  productive  agencies  into  paths  of 
natural  unproductiveness,  by  scattering  on  their  way-sides 
golden  tribute  from  other  interests. 

The  internal  fruits  of  the  British  corn  laws,  were, 
likewise,  infinitely  worse  than  their  external  conse- 
quences. It  has  been  shown  that  they  enriched  the 
landed  interest  by  stealthily  abstracting  the  profits  of  all 
other  producers  of  that  nation,  and  that  in  doing  so  they 
but  accomplished  their  iniquitous  design  ;  in  addition  to 
which,  they  wasted  much  of  the  fruits  of  British  industry 
and  capital,  by  strewing  artificial  profits  around  the  culti- 
vation of  the  barren  heath  and  the  naked  rock,  while  the 
productions  of  the  fertile  soils  of  the  earth  stood  knocking 
at  her  doors,  in  vain  demanding  entrance.  The  conse- 
quent loss  of  productive  service  was  all  borne  by  her  own 
people,  because  they  consumed  the  things  thus  expensively 
produced. 

These  laws  also  greatly  diminished  the  foreign  com- 
merce of  Great  Britain.  They  lessened  her's  as  much 
as  they  did  that  of  all  other  nations  combined.  They 
compelled  each  of  all  other  nations  to  trade  a  little  less 
with  her  ;  but  while  the  diminution  to  each  was  trifling 
in  amount,  by  reason  of  its  distribution,  the  gross  sum, 
which  had  to  be  borne  by  Great  Britain  alone,  on  one 
side,  was  necessarily  large ;  and  while  they  only  drove 
that  of  other  nations  into  the  next  best  channels,  they 
absolutely  destroyed  her  own  share  of  the  diminution. 


CHAP.    IV.]  INTERNATIONAL    COMMERCE.  255 

And,  finally,  while  the  injurious  effects  of  the  British 
corn-laws  fell  with  such  withering  force  on  her  own 
interests,  and  so  lightly  as  to  be  scarcely  preceptible  on 
ours,  on  her's  they  were  permanently  confined  to  one  por- 
tion of  her  people,  while  on  ours,  they  were  equally  dis- 
tributed through  all  classes  and  all  productive  interests. 

What  I  have  said  in  illustration  of  the  very  slight 
degree  of  injury  inflicted  by  the  corn-laws  of  Great 
Britain  on  the  prosperity  of  foreign  states,  will  apply 
with  equal  and  even  greater  force  to  the  international 
consequences  of  all  other  tariffs ;  for  this  is  the  strongest 
case  on  record.  The  truth  is,  the  injury  is  so  small  that 
it  is  of  no  practical  importance ;  and  but  for  the  desire 
of  demonstrating  that  fact,  as  well  as  for  the  sake  of 
scientific  exactness,  I  should  not  have  deemed  it  worthy 
of  a  moment's  notice. 

In  view  of  all  the  considerations  now  advanced,  we 
cannot,  as  it  appears  to  me,  avoid  the  general  inference 
that  all  tariff  laws  are  unmitigated  evils  :  the  premises 
admit  of  no  other  conclusion.  Their  tendencies  are  all 
bad,  and  may  be  recapitulated  thus  : 

As  a  method  of  raising  revenue  they  are :  First, 
oppressively  expensive  ;  costing  in  the  collection,  as 
evidenced  by  our  own  tariff,  75  per  cent,  more  than 
the  direct  method  of  taxation :  Secondly,  they  are  ine- 
quitable as  a  rule  of  assessment,  since  they  distribute 
the  burdens  of  taxation,  not  in  proportion  to  the  benefits 
conferred  by  government,  nor  the  ability  to  pay,  but 
according  to  the  amount  of  consumptions.  These  neces- 
sarily correspond  in  some  degree  with  the  relative  num- 
bers of  which  the  families  of  the  tax  payers  respectively 
consist ;  consequently,  by  this  rule  the  poor  are  often 
compelled  to  pay  higher  taxes  than  the  rich. 

As  a  means  of  fostering  pet  interests  at  home,  they 


256  RESTRAINTS    ON  [PART    II. 

are  unjust,  and  for  other  reasons  unwise.  Their  injus- 
tice consists  in  extorting  tribute  from  one  class  of  the 
community,  for  the  benefit  of  another  class  which  does 
riot  need  their  aid  ;  their  folly,  in  placing  hindrances  on 
the  most  direct  roads  to  wealth,  and  in  strewing  artificial 
profits  on  paths  which  naturally  lead  to  poverty,  thereby 
enticing  a  part  of  the  productive  energies  of  the  nation 
from  channels  of  greater  productiveness  to  those  of  less. 

As  a  means  of  countervailing  the  restrictive  policy  of 
foreign  states,  they  are  worse  than  ineffectual ;  for  while 
they  utterly  fail  to  ward  off  the  slight  external  injuries 
incident  to  that  policy,  they  inflict  on  the  nation  adopt- 
ing them  other  injuries  of  a  far  more  serious  kind — 
injuries,  in  comparison  with  which,  the  former  are  as 
nothing. 

Such  I  believe  to  be  a  fair  presentation  of  the  charac- 
ter and  consequences  of  the  tariff  policy.  If  it  pos- 
sesses a  single  beneficient  attribute,  or  yields  a  single 
benefit,  in  mitigation  of  its  manifold  evils,  they  have 
escaped  my  search.  It  is  maintained  by  some,  that  this 
policy  is  essential  to  national  independence ;  that  it 
secures  the  home  production  of  the  munitions  of  war  and 
other  materials  of  defence,  without  which  a  nation  would 
be  liable  to  foreign  subjugation. — The  only  answer  which 
this  position  requires  is,  that  where  the  natural  laws  of 
trade  fail  to  develope  the  means  of  national  defence,  to 
the  extent  which  safety  may  require,  it  is  the  duty  of 
government  to  do  it  itself.  For  instance,  if  the  defi- 
cient material  be  amunition,  the  government  should  man- 
ufacture it ;  if  ships  of  war,  it  should  build  them,  and 
so  on.  It  is  apart  of  the  duty  of  government  to  pro  vide 
for  the  national  defence,  but  it  may  do  so  in  a  direct  and 
sensible  way,  without  resorting  to  an  expedient  so  unjust 
and  impolitic  as  tariff  laws. 


CHAP.    IV. J         INTERNATIONAL    COMMERCE.  257 

The  objections  urged  against  the  class  of  laws  we  have 
been  considering,  will,  with  one  exception,  apply  with 
equal  force  to  every  legislative  restraint  upon  commerce, 
and  to  every  governmental  interference  with  the  natural 
laws  of  trade  and  production ;  for  the  class  we  have 
been  considering  is  a  correct  type  of  the  whole  restric- 
tive policy. 

The  exception  referred  to  is  the  class  of  laws  which 
relate  to  the  navigating  interest.  These  are  sometimes 
confounded  with  tariff  laws,  from  which,  however,  they 
are  entirelv  distinct.  Navigation  is  a  productive  interest, 
and  a  very  important  one,  since,  in  addition  to  its  utility  as 
one  of  the  processes  of  commerce,  it  fashions  materials 
for  the  most  efficient  arm  of  national  defence.  When 
employed  in  foreign  commerce  it  has  one  peculiarity 
which  distinguishes  it  from  every  other  interest — name- 
ly :  the  voyage  cannot  be  accomplished,  the  productive 
process  cannot  be  completed,  nor  made  to  yield  fruits, 
without  entering  the  territory  or  going  within  the  juris- 
diction of  foreign  states.  To  do  this  it  is  of  course 
necessary  that  nations  should  have  each  others  assent, 
and  also,  that  the  conditions  and  terms  of  the  assent 
should,  in  all  cases,  conform  to  the  rule  of  reciprocity ; 
since  the  navigation  of  a  state  which  failed  to  insist  on 
its  rights  under  that  rule,  would,  by  discriminations 
against  it,  be  soon  driven  within  the  narrow  limits  of 
its  internal  or  domestic  commerce.  This  is  the  only 
case  in  which  it  is  necessary  that  one  state  should 
require  of  others  that  the  terms  of  intercourse  be  reci- 
procal ;  and  it  will  be  perceived  that  the  reciprocity  does 
not  relate  to  commerce  or  any  other  branch  of  production 
as  such,  but  merely  to  the  privilege  of  entering  each 
others  ports  for  the  purpose  of  consummating  a  peculiar 
operation  of  production.  Every  other  productive  pro- 


258  FREE    TRADE.  [PART    II. 

cess  can  be  finished  at  home,  or  on  waters  common  to  all 
nations,  and  hence  do  not  need  the  assent  of  other 
nations. 


SECTION  4. 
Of  free  trade  and  direct  taxation. 


In  prefacing  this  chapter  with  some  general  observa- 
tions indicative  of  its  scope  and  purpose,  I  remarked,  in 
substance,  that  it  was  chiefly  depigned  to  demonstrate 
the  truth  of  the  following  proposition,  namely:  That 
Free  Trade — absolute,  unconditional  Free  Trade,  and 
Direct  Taxation,  is  the  true  policy  of  all  nations,  and 
of  each  nation  regardless  of  the  course  pursued  by  all 
others. 

It  is  hoped  that  the  end  proposed  is  already  attained ; 
for,  although  we  have  been  thus  far  exclusively  engaged 
in  considering  the  effects  produced  by  commercial  res- 
trictions and  indirect  taxation,  yet,  if  I  have  succeeded 
in  demonstrating  their  injustice  and  folly,  I  have  also 
shown  the  wisdom  of  free  trade  and  direct  taxa- 
tion, since,  as  the  terms  import,  the  one  policy  is  the 
opposite  of  the  other :  every  objection  which  has  been 
urged  against  the  former  will  apply  with  equal  force  in 
favor  of  the  latter.  I  shall*  not,  therefore,  tax  the 
patience  of  the  reader,  by  turning  over  the  arguments 
contained  in  the  preceding  sections,  so  as  to  present  their 
positive  face  instead  of  their  negative :  the  reader  will 
find  no  difficulty  in  shifting  their  application  himself. 
But  since  it  is  the  object  of  this  treatise  to  indicate  the 
true  policy  of  government  in  reference  to  the  produc- 


CHAP.    IV. J  FREE    TRADE.  259 

tion,  distribution  and  consumption  of  wealth,  as  well  as 
to  point  out  the  errors  of  existing  economic  legislation, 
systematic  completeness  seems  to  require  that  I  should 
present  in  this  place,  at  least  a  synopsis  of  the  principal 
arguments  which  may  be  fairly  advanced  in  favor  of 
commercial  freedom.  Arguments  illustrative  of  the 
wisdom  of  direct  taxation,  have  already  been  presented 
with  sufficient  directness,  and,  perhaps,  with  unnecessary 
fullness. 

If  all  men  were  left  free  to  apply  their  productive 
agents  to  such  processes  as  they  are  respectively  best 
fitted  for  by  nature,  circumstances,  habit  and  inclination — 
subject  to  no  other  modifications  or  restraints  than  those 
imposed  by  the  desire  of  gain — the  aggregate  results 
would  be  greater  than  when  a  portion  of  them  are  forced 
into  channels  for  which  they  are  unsuitable.  This  is 
self-evident.  All  commercial  restrictions,  whether  de- 
signed for  revenue  or  protection,  thus  divert  the  natural 
currents  of  industry,  capital,  and  the  productive  service 
of  land.  For  an  illustration  of  this  truth,  witness  the  cul- 
tivation of  the  beet-root  in  France,  and  the  sugar-cane  in 
Louisiana.  The  universal  adoption  of  the  free  trade 
policy  would  of  course  prevent  the  whole  of  this  loss  ; 
and  the  isolated,  single-handed  adoption  of  that  policy 
by  any  one  nation,  would,  as  we  have  seen,  screen  the 
citizens  thereof  from  at  least  ninety-nine  hundredths  of 
their  share  of  the  loss.  Therefore,  under  the  benign 
influence  of  this  policy,  mankind  would  be  able  to  supply 
their  physical  wants  in  less  time,  or  by  the  expenditure 
of  a  smaller  quantity  of  productive  service,  than  is  now 
required  ;  which  would  leave  a  larger  share  of  life  to  be 
devoted  to  mental  wants,  to  intellectual  culture,  to  the 
improvement  of  the  spiritual  man.  When  it  is  remem- 
bered that  these  are  the  only  attributes  which  distinguish 


260  FREE    TRADE.  [PART    II. 

us  from  the  brutes  that  perish,  how  obvious  is  the  wis- 
dom of  that  policy  which  promotes  so  beneficent  an  end. 
True,  another  tendency  of  high  profits,  or  enlarged  pro- 
duction, is,  to  increase  the  amount  of  population ;  but, 
that  this  is  not  the  only  one,  that  they  also  tend  to  promote 
the  mental  or  spiritual  elevation  just  noticed,  is  abund- 
antly proved  by  history  as  well  as  by  the  present  condi- 
tion of  the  different  nations,  and  especially  by  the  rela- 
tive superiority,  in  intellectual  developement,  of  the 
civilized  section  of  the  human  family  when  compared  with 
the  savage.  By  some,  this  comparison  may  not  be 
regarded  as  a  fair  one  ;  but  if,  as  I  endeavored  to  show 
in  a  former  chapter,  social  wealth  was  the  primary 
cause  of  civilization,  the  comparison  is  perfectly  legi- 
timate. 

It  seems  to  me  that  the  foregoing  considerations  should 
be  sufficient,  of  themselves,  to  bring  every  right  thinking 
man  to  support  the  free  trade  policy.  But  there  is 
another  consideration,  which,  to  my  mind,  is  still  more 
conclusive  in  its  favor — namely  :  it  is  the  only  just 
policy.  While  the  restrictive  policy  constantly  violates 
the  relative  rights  of  the  citizens  or  subjects,  by 
robbing  some  and  enriching  others,  and,  by  repeated 
modifications,  perpetuates  the  injustice,  free  trade  leaves 
all  to  place  reliance  on  their  own  merits  alone,  and 
secures  to  every  individual  the  just  rewards  of  his  pro- 
ductive efforts  and  enterprises. 

In  a  word,  free  trade  permits  the  all-wise,  benevolent 
and  just  laws,  which  the  Creator  has  established  to 
govern  the  production  and  distribution  of  wealth,  to 
move  on  in  uninterrupted  harmony  to  the  accomplish- 
ment of  their  appropriate  ends.  Therefore,  this  policy 
is  as  strongly  marked  by  wisdom  and  justice  as  its  oppo- 
site is  by  folly  and  wrong. 


CHAP.  IV.]  FREE   TRADE.  261 

If  practical  illustrations  of  the  benefits  conferred  by 
this  policy  be  asked  for,  I  might  point  to  the  evidences 
afforded  by  the  highly  profitable  and  extensive  commerce 
carried  on  between  the  different  states  of  this  Union. 
Or,  if  it  be  denied  that  this  commerce,  from  which  for- 
eigners are  in  a  measure  excluded,  can  fairly  illustrate 
the  practical  effects  of  free  trade,  I  might  refer  to 
Switzerland.  That  nation  long  since  adopted  this  policy 
in  its  fullest  and  broadest  extent,  and  she  adopted  it 
alone.  Situate  in  the  centre  of  Europe,  surrounded  by 
powerful  nations  which  refused  to  reciprocate,  she  had 
the  boldness  and  the  wisdom  to  throw  her  gates  open  to  the 
free  ingress  of  the  commodities  of  the  world.  The  prac- 
tical results  of  her  experiment  have  been,  so  far  as  I  am 
informed,  altogether  favorable  to  the  theory  of  commer- 
cial freedom.  From  personal  observation,  I  can  bear 
testimony  to  the  appearance  of  general  prosperity  and 
comfort  witnessed  every  where  within  her  borders,  sur- 
passing in  these  respects  the  adjoining  provinces  of  other 
nations.  Nor  are  the  mass  of  the  Swiss  people  insensible 
of  the  benefits  which  they  derive  from  this  policy,  as  was 
proved  by  an  occurrence  which  took  place  there  a  few- 
years  since.  Some  manufacturers  in  one  of  the  eastern 
cantons,  feeling  the  weight  of  competition  from  similar 
fabrics  produced  in  Alsace,  a  neighboring  province  of 
France,  petitioned  the  General  Diet  to  grant  them  pro- 
tection. The  petition  was  respectfully  received  and 
considered,  but  the  boon  it  asked  for  was  denied,  promptly 
and  almost  unanimously  ;  and  the  action  of  the  repre- 
sentatives of  the  cantons  met  the  approbation  of  the 
people. 

Unfortunately,   the  practices   of  nations   afford    no 
further  direct  evidences  on  this  subject,  as  Switzerland 
is,  I  believe,  the  only  political  community  of  any  note 
23 


262  FREE    TRADE.  [PART  II. 

whose  practice  conforms  to  our  theory.  At  all  events, 
she  is  the  only  free  trade  nation  with  whose  condition  and 
laws  I  am  sufficiently  familiar  to  speak  with  confidence. 
The  experimental  light  -which  her  example  affords  is  in 
perfect  harmony  with  our  theoretic  conclusions.  It 
therefore  verifies  the  proposition  which  stands  at  the 
head  of  this  section. 

It  now  only  remains  to  point  out  the  proper  method  of 
applying  this  theory.  It  is  maintained  by  some,  that 
however  injurious  the  existing  policy,  and  however  bene- 
ficial the  one  proposed,  the  evils  incident  to  the  transi- 
tion would  outweigh  the  benefits  to  be  secured,  and  hence, 
that  the  change  should  not  be  made.  This  is  a  very 
great  error.  True,  the  change  would  depress  such 
interests  as  had  grown  up  under  the  hot-bed  influence  of 
protection ;  it  would  at  first  diminish  their  profits  and 
ultimately  banish  them  to  more  congenial  localities,  just 
as  the  invention  of  the  power-loom  first  injured  hand- 
loom  weavers  and  ultimately  drove  most  of  them  into 
other  employments.  And  so  of  all  other  improvements 
in  the  science  and  arts  of  production  :  while  they  are  the 
stepping  stones  which  Providence  designed  to  aid  us  in 
the  attainment  of  a  higher  civilization,  by  increasing  the 
aggregate  means  of  enjoyment  and  comfort,  the  human 
family  never,  in  its  progress,  took  a  step  in  advance 
which  did  not  injure  some  of  its  members.  But  this  is 
no  sufficient  objection  to  the  adoption  of  free  trade,  or 
any  other  improvement.  The  greatest  good  of  the 
greatest  number,  is  the  true  doctrine.  Besides,  the 
interests  which  would  be  prejudiced  by  the  change  pro- 
posed, are  but  the  offspring  of  injustice  and  folly ; — they 
were  born  of  that  double  parentage,  and  have  been  reared 
at  the  expense  of  other  interests,  so  that  it  is  but  fair 
that  they  should  be  made  to  disgorge.  I  would  not, 


CHAP  IV.]  FREE    TRADE.  263 

however,  recommend  the  sudden,  as  well  as  the  total 
abandonment  of  the  restrictive  policy.  I  hold  it  to  be 
unjust,  and  for  other  reasons  unwise,  to  make  sudden 
and  great  changes  in  laws  which  affect  the  pecuniary 
interests  of  the  citizen.  When  public  good  demands  the 
change,  it  should  be  the  work  of  time,  and  brought  about 
by  gentle  gradations  like  those  of  the  Compromise  Act, 
or  tariff  of  1833.  \Z_ 

If  our  government  should  make  the  transition  by 
means  of  a  law  which  removed  one  tenth  of  the  present 
duties  annually,  for  ten  consecutive  years,  the  evils 
incident  thereto  would  be  in  a  great  measure  avoided. 
All  protected  interests  that  should  prove  to  be  congenial 
to  the  soil  and  climate  of  our  country,  and  adapted  to 
the  genius  of  our  people,  would  glide  imperceptibly  into 
the  new  order  of  things,  and  flourish  under  profits  less 
exorbitant  perhaps,  but  more  just,  as  well  as  more 
uniform  and  secure.  Those  not  possessing  these  re- 
quisites would  be  abandoned  for  more  profitable  employ- 
ments. In  fact,  illegitimate  interests — those  interests 
which  thrive  only  in  virtue  of  the  tribute  they  receive — 
would  be  rooted  out  by  free  trade  with  that  discrimina- 
ting judgment  and  completeness  with  which  a  skilful 
gardener  removes  the  weeds  from  his  beds. 


^AM 


205 


CHAPTER  V. 

OF  MONEY. 

SECTION  1. 

Of  Coin. 

In  the  first  section  of  the  chapter  on  the  natural  laws 
of  trade,  I  have  pointed  out  the  nature  and  uses  of 
money,  and  have  said  perhaps  all  that  is  necessary  in 
relation  to  money  in  the  peculiar  form  of  coin.  But  since 
the  problems  connected  -with  the  subject  are  alike  intri- 
cate and  important,  I  prefer  passing  hastily  over  that 
ground  again,  in  order  to  preserve  the  unity  of  the  sub- 
ject, as  well  as  the  requisite  connection  in  the  chain  of 
reasoning  by  which  I  hope  to  unfold  its  truths. 

Money  is  an  instrument  of  commerce,  designed  to 
facilitate  the  exchange  of  all  other  commodities  by  pre- 
senting-- an  equivalent  in  a  portable  and  convenient 
shape.  A  ship  carries  values  from  one  market  to 
another ;  money  measures  and  transfers  them  from  one 
owner  to  another :  this  is  its  only  office.  It  is  one  of 
those  machines  which  the  ingenuity  of  man  has  contrived 
for  facilitating  the  production  of  wealth.  But  for  its 
invention,  commerce  would  have  to  accomplish  its  ex- 
changes by  the  awkward  and  expensive  process  of  barter. 
It  is,  therefore,  strictly  speaking,  a  labor-saving  ma- 
chine, and  I  may  add  that  it  is  also  a  power-increasing 
23* 


266  MONET,  [fcART   II. 

machine,  since  it  would  be  impossible,  .by  any  other  known 
method,  to  carry  the  interchange  of  commodities  to  the 
extent  and  perfection  now  witnessed.  All  kinds  of  pro- 
ductive machinery,  from  a  needle  up  to  a  steam  ship, 
possess  one  or  other,  or  both  of  these  attributes—- 
they either  lessen  labor  or  they  aid  in  producing  things 
which  human  effort  alone  is  incapable  of  producing. 
Money  does  both,  and  it  is  thus  that  its  services  con- 
tribute to  the  increase  of  wealth.  True,  the  materials" 
of  which  real  money  is  made  (gold  and  silver)  are  valua- 
ble for  the  purposes  of  art,  but  that  application  of  their 
value  has  nothing  whatever  to  do  with  their  functions  as 
money  5  nor  would  their  adaptation  to  this  purpose  be 
lessened  if  their  usefulness  in  every  other  respect  should/ 
destroyed.  This  is  sufficiently  proved  by  the  fact  that 
bank  notes,  the  material  of  which  is  without  correspond- 
ing value  for  other  purposes,  are,  in  virtue  of  their  repre- 
sentative or  convertible  attribute,  capable  of  performing 
the  office  of  money. 

I  have  said  that  the  only  purpose  to  which  money  can 
be  usefully  applied  is,  to  be  given  in  exchange  for  other 
values,  and  at  the  same  time  to  measure  them.  In 
strictness  it  should  be  observed,  that  it  is  also  the  instru- 
ment usually  chosen  for  completing  contracts  which 
have  been  entered  into  on  credit.  In  such  cases  it 
performs  the  same  office  without  being  present,  but  it  is  in 
virtue  of  a  promise  that  it  shall  appear  at  a  stipulated 
time.  This  is,  therefore,  a  service  identical  in  character 
with  the  one  first  named,  but  rendered  in  a  modified 
form. 

If  the  oldest  coin  extant  were  capable  of  impart- 
ing its  history,  we  should  find  that  its  only  acts  of  utility 
had  been  in  performing  the  services  already  named. 
Place  money  in  a  till  or  safe,  and  it  will  not  increase, 


CHAP.  r.J  MONEY.  267 


though  it  be  left,  there  forever.  If  we  loan  it  to 
another,  and  he  returns  us?  at  a  subsequent  period,  the 
amount  with  interest,  he  is  enabled  to  do  so,  not  because 
it  increases  in  his  hands,  but  because  he  gives  it  proper 
employment  —  the  transferring  of  ^ues.  We  transfer 
it  to  him  in  exchange  for  his  obligation  to  return  us  tha 
amount  together  with  a  commission  for  its  use,  because 
we  do  not  care  to  have  the  trouble  of  superintending  its 
service  ourselves.  He  sets  it  at  work  by  exchanging  it  for 
other  values,  whence  it  proceeds  on  its  appropriate  mis- 
sion, while  he  labors  to  modify,  and  thus  increase,,  the 
values  he  has  received  in  exchange  for  it.  These  he 
again  exchanges  for  other  money,  out  of  which  he  returns 
the  amount  borrowed  together  with  interest,  retaining 
the  balance,  if  any,  as  his  reward  for.  superintendence.. 
It  is  to  be  noticed  that  the  identical  money  loaned  is  not 
returned  to  us,  that  having  been  taken  by  the  borrower 
only  as  a--  means  of  obtaining  other  values,  in  the  super- 
intendence or  modification  of  which  he  could  profitably 
employ  his  labor  and  skill  ;  the  money  meanwhile  per- 
forming its  office  by  passing  from  hand  to  hand,  and 
thus  yielding  a  like  service  to  hundreds  of  others.  T 
vagrant,  non-returning  habit,.  is  peculiar  to  money,  sincer 
if  we  loan  or  let  any  other  kind  of  property,  whether  it 
be  in  the  form  of  machinery,  houses  or  land,  it  will  be 
returned  to  us  at  the  expiration  of  the  contract,  not  in 
kind,  but  in  identity.  Money  is  returned  in  kind  only  ; 
which  fact,  while  it  distinguishes  this  productive  agent 
from  all  others,  and  indicates  the  nature  of  its  service, 
clearly  proves  the  singleness  of  its-  office. 

Money,  to  be  useful,  must  be  kept  in  motion  ;  for, 
like  all  other  machinery,  it  is  unproductive  when  at  rest. 
To  this  activity  it  is  impelled,  alike  by  the  prodigality 
of  the  spendthrift  and  the  prudence  of  the  frugal.  The 


268  MONEY.  [PART  n. 

latter  set  it  in  motion  for  the  sake  of  its  revenue  ;  the 
former,  for  the  sake  of  consuming  the  commodities  that 
may  be  obtained  in  exchange  for  it.  The  only  excep- 
tions to  this  rule  are  those  misers  who,  through  the 
joint  effect  of  ignorance,  fear  and  avarice,  doom  their 
money  to  idleness  by  hoarding  it. 

Having  explained  the  object  of  the  inventor,  by  point- 
ing out  the  office  which  the  resulting  machine  was  de- 
signed to  fill,  and  having  shown  that  it  is  incapable  of 
yielding  other  useful  service,  be  it  our  next  task  to  ex- 
amine the  machine  itself.  It  is  important  that  we  know 
its  merits  as  an  invention,  its  form,  its  size,  and  of  what 
materials  it  is  made ;  as  without  such  knowledge  we  can- 
not judge  of  its  adaptation  to  the  end  designed. 

Before  entering  upon  this  examination,  however,  it  is 
proper  to  state  that  there  are  three  kinds  of  money  in 
use — namely,  coin,  convertible  paper,  and  inconvertible 
paper ;  and  that  they  constitute  three  distinct  inventions 
or  machines,  each  of  which  will  claim  a  section  by 
itself.  For  the  present,  we  are  to  consider  the  first 
named  only  ;„  and  in  or.der  that  we  may  divest  the  subject  of 
unnecessary  intricacies,  it  will  be  well  to  assume  that  no 
other  kind  of  money  exists.  It  is  well  known  that  money, 
in  its  simplest  form,  passes  at  its  real  value ; — in  other 
words,,  that  the  market  value  of  coin  corresponds  with 
the  true  value  (cost  of  production  plus  average  profits,) 
of  the  materials  whereof  it  is  composed.  As  relates  to 
convertible  and  inconvertible  paper  money,  the  case  is 
different,  as  we  shall  find  when  we  come  to  consider 
them. 

First,  then,  as  to  the  merits  of  the  invention.  The 
desideratum  was,  as  we  have  seen,  the  invention  of  an 
instrument  or  machine,  capable  of  measuring  the  value 
of  commodities,  and  of  shifting  their  ownership  without 


CHAP.    V.]  MONEY.  269 

resorting  to  the  inconvenient  and  expensive  process  of 
barter.  The  plan  devised  was  simply  this  :  For  govern- 
ment to  select  from  the  whole  class  of  valuable  commo- 
dities, one  or  more  kinds;  reduce  each  to  a  uniform 
quality ;  divide  them  into  pieces  of  different  sizes,  con- 
taining known  qualities  ;  stamp  them  with  distinctive 
names,  arbitrarily  chosen,  and  with  the  name  of  the 
government  issuing  them  ;  and  then  to  send  them  forth, 
not  only  as  the  established  measure  of  value  and  instru- 
ment of  transfer,  but  also  as  a  legal  tender  in  payment* 
of  debts.  In  whatever  aspect  the  subject  may  be  view- 
ed, it  will  be  found  that  this  is  all  there  is  of  genius  in 
the  invention  of  money  in  the  form  of  coin.  It  cannot 
be  denied  that  the  conception  or  plan,  simple  as  it  is,  \ 
and  imperfect  as  we  shall  find  it  to  be,  is  yet  entitled  to  ! 
great  merits  as  an  invention,  since  the  resulting  machine 
has  answered  the  aim  of  its  projectors  by  superseding 
the  system  of  barter.  The  plan  has  also  been  execu- 
ted with  becoming  skill  and  judgment.  The  only 
serious  error  in  this  respect  is  in  the  naming  of  coins. 
Instead  of  stamping  them  with  arbitrary  names,  the 
name  should  express  the  kind,  quality  and  weight  of  the 
material.  If  this  rule  of  naming  had  been  adopted, 
much  of  the  confusion  and  intricacy  of  international 
commerce  and  exchanges  would  have  been  avoided. 

Gold  and  silver  have  been  selected  as  the  materials  ; 
and  if  we  glance  at  the  service  to  which  the  machine  ia 
applied,  and  thus  learn  the  requisite  properties  of  its 
material,  we  shall  find  that  they  have  been  wisely  chosen., 
We  are  familiar  with  the  fact  that  every  purchase  or 
sale  is,  by  the  parties  thereto,  deemed  to  be  an  exchange 
of  equivalents  ;  and  since  the  plan  of  this  sort  of  money 
requires  that  it  pass  from  hand  to  hand  at  its  true  value, 
it  follows  that  the  material  must  possess  the  attribute 


270  MONEY.  [PART  n. 

value  :  to  be  convenient  for  carriage  or  transportation,  it 
should  embody  much  of  that  attribute  in  small  compass 
and  weight :  to  prevent  abrasion,  to  which  it  is  peculiarly 
exposed  by  constant  use,  it  should  possess  the  qualities, 
hardness  and  adhesiveness  :  to  qualify  the  machine  for 
measuring  all  degrees  of  value,  the  material  should  be 
susceptible  of  exact  divisions,  and  minute  subdivisions  : 
to  prevent  fluctuations  in  the  quantity  and  value  of 
raoney,  the  material  should  be  one  whereof  the  cost  of 
production  is  uniform  :  to-  prevent  frauds  by  counterfeit- 
ing, it  should  be  difficult  to  imitate.  These  are  the 
essential  properties  required  in  the  material  of  money  ; 
and  it  is  well  known  that  they  are  more  fully  combined 
in  the  metals  gold  and  silver,  than  in  any  other  commo  - 
dities.  Either  one  of  these  metals  would  have  answered 
the  purpose,  without  the  other ;  but  it  was  found  that 
gold,  by  reason  of  its  high  cost,  was  not  well  adapted  to 
the  measurement  of  small  values,  and  that  silver,  in 
consequence  of  its  low  cost,  was  inconvenient  as  an  instru- 
ment to  measure  and  transfer  large  values ;  hence  the 
adoption  of  both. 

Now,  although  the  materials  have  been  well  chosen—- 
under the  plan  devised,  none  better  could  have  been 
selected — yet,  it  will  be  noticed  that  they  are  liable  to 
three  serious  objections  :  namely,  their  production  costs 
too  much,  they  are  too  heavy  for  convenience,  and  their 
value  fluctuates.  The  plan,  therefore,  is  defective.  It 
would  be  an  achievement  of  some  moment  to  so  modify 
the  plan  as  to  permit  the  use  of  materials  free  from  these 
objections,  without  impairing  the  efficiency  of  the  machine. 
This,  it  is  believed,  may  be  accomplished  by  a  method  to 
be  pointed  out  in  the  third  section. 

Next,  let  us  glance  at  the  form  or  shape  of  this  ma- 
chine. If  we  contemplate  the  aggregate  of  money  in 


CAAP 


.    V»]  MONEY*  271 


the  world  as  a  unit,  we  find  it  to  be  of  the  exact  pro- 
portions of  commerce,  whose  handmaid  it  is.  Wherever 
commerce  exists,  there  money  is  to  be  found  aiding  its 
operations,  by  facilitating  the  exchange  and  distribution 
of  commodities.  Where  the  commerce  is  heavy,  there 
the  section  of  the  machine,  or  the  quantity  of  money,  is 
large ;  where  the  commerce  is  light,  there  the  section  is 
small.  So  uniform  is  this  correspondence,  that  the 
amount  of  money  employed  in  any  given  market,  is  an 
unerring  indicator  of  the  extent  of  its  commerce. 

We  are  now  prepared  to  consider  the  size  of  this  ma- 
chine, which,  it  is  to  be  observed,  is  the  most  important 
aspect  in  which  the  subject  can  be  viewed.     In  contem- 
plating the  plan  of  the  inventor,  we  discovered  no  device 
or  function  for  limiting,  or  in  any  manner  controlling, 
the   amount   of  money  in   circulation ;  and  a  moment's 
reflection  will  convince  us  that  no  such  function  exists  in 
the  machine,  or  was  intended  to  exist,  the  inventor  hav- 
ing left  its  aggregate  size  and  shape  to  such  development 
as  the  natural  laws  of  trade   might  happen   to   give. 
What,  then,  is  the  size  which  they  have  established  ?     If 
these  laws  be  such  as  they  have  been  defined  in  a  former 
chapter,  and  if  the  foreging  exposition  of  the  nature  of 
money  and  its  uses  be  true,  it  then  follows  that  there 
will  exist  at  all  times,  and  at  all  places,  an  amount  of 
value  in  the  form  of  money  precisely  equal  to  the  per- 
formance of  the   service   required  of  that  instrument ; 
which   is,  to  measure    and  transfer  all  other  values  in 
search  of  a  market,  without  failing  to  measure  them 
correctly  ',  and  that,  whether  we  consider  the  commercial 
world  as  divided  into  individual  markets,  or  into  nations, 
or  as  one  grand  mart,  it  will  be  found  true  in  relation  to 
each  individually,  and  to  all  collectively.     There  will,  it 
is  true,  be  temporary   departures   from   this   standard, 


272  MONEY.  [PART  n. 

caused  by  the  alternating  preponderance  of  supply  and 
demand,  but,  like  all  other  commodities,  the  sum  of  the 
variations  above  it  will  exactly  equal  the  aggregate  of 
those  below. 

In  illustration  of  the  soundness  of  these  positions,  we 
will  first  consider  the  aggregate  of  money  in  the  world  as 
a  single  instrument  of  commerce.     We  will  suppose  the 
amount  now  in  circulation  to  be  $4,000  millions-,  con- 
sisting of  one  half  gold  and  silver  coin,  the  other  half 
convertible  paper ;  and  we  will  further  suppose,  that  the 
amount  named  fills  the  channels   of  circulation  to  that 
natural  degree  of  fulness  which  enables  this  instrument 
of  commerce  not  only  to  transfer  all  other  commodities 
in  search  of  a  market,  but,  at  the  same  time,  to  measure 
their  value  correctly.     In  other  words,  that  the  relative 
quantities  of  money  and  other  commodities  are  so  well 
balanced,   the   supply    and   demand   for   each    are   so 
even,  that  the   industry  and  capital  employed  in  pro. 
ducing  the  one   are   neither   more   nor   less   profitable 
than  those  engaged  in  the  production  of  the  other.     As 
long  as  the   equilibrium   continues,   production  in  each 
department  will  go  on  temperately  and  evenly,  the  vo- 
taries of  each  receiving  their  appropriate  rewards.     But 
suppose   convertible  paper  money   sKould  be  suddenly 
and  universally  suppressed,  and  the  use  of  every  other 
substitute  for  coin  strictly  prohibited.     According  to  our 
supposition,  this  would  lessen  the  amount  of  money,  or 
contract  the  dimensions  of  the  machine,  one  half.     What 
would   be   the   consequences?      The   first  consequence 
would  be,  that  the  remaining  half  would  have  to  perform 
the  same  amount  of  service   that   the   whole  had  done 
before ;  and  since  we  have  seen  that  it  was  then,  as  in 
fact  it  always  is,  whatever  be  the  quantity  in  circulation, 
under  the  lash  and  spur  of  the  self-interest  and  the  im- 


CHAP.    V.J  MONEY.  273 

providence  of  mankind,  we  cannot  expect  it  to  go  faster 
now.  Therefore,  every  dollar  must  now  measure  at  each 
transfer  double  the  quantity  of  value  it  did  before  ;  con- 
sequently, instead  of  being  a  true  measure  it  is  now  a 
false  one;  but  we  shall  find  that  the  change  is  only 
temporary.  For  example :  Before  the  diminution  took 
place,  one  bushel  of  wheat  and  one  dollar  (we  shall 
say,)  were  equivalent  values ;  that  is,  they  would  not 
only  purchase  each  other  in  the  market,  but  reward 
their  respective  producers  with  the  same  degree  of  pro- 
fit, say  five  cent,  per  annum.  After  the  diminution, 
one  dollar  would  buy  two  bushels  of  wheat,  or  twice 
the  usual  quantity  of  any  other  product ;  so  that  the 
production  of  gold  and  silver,  instead  of  yielding  to  the 
industry  and  capital  employed  therein,  five  per  cent. 
per  annum,  (the  average  rate  of  profit  in  all  depart- 
ments of  production,)  would  now  yield  at  least  fifty 
per  cent.  How  promptly  and  how  strongly  would  these 
unwonted  profits  excite  the  desire  of  gain,  and  thus 
impell  fresh  votaries  to  join  in  the  production  of  gold 
and  silver.  Plate  and  bullion  would  be  transformed  into 
coin ;  existing  mining  operations  would  be  prosecuted 
with  increased  vigor  ;  mines  long  since  abandoned  would 
be  re-opened,  and  the  earth  would  be  ransacked  and  its 
bowels  torn  open  in  search  of  fresh  ones.  This  state  of 
things  would  soon  produce  an  over  supply  of  coin,  which, 
in  its  turn,  would  cause  a  reaction ;  and  so  on,  with  les- 
sening oscillation,  until  the  equilibrium  of  profits  as  well 
as  the  natural  relations  of  money  and  other  commodities 
were  permanently  restored. 

It  thus  appears  that  the  existing  aggregate  of  money 

cannot  be  permanently  diminished,  since,  if  any  portion 

of  it  be  destroyed  by  accident  or  legislation,  the  natural 

laws  of  trade,  which  govern  the  production  of  all  sorts  of 

24 


274  MONEY.  [PART  n. 

wealth,  will  speedily  restore  to  this  machine  its  original 
or  natural  dimensions.  Nor  can  it  be  perm antently  en- 
larged, except  by  the  augmentation  of  commerce.  In 
illustration  of  this  truth,  let  us  assume,  as  before,  that 
the  existing  quantity  of  money  in  the  world  is  $4,000- 
000,000 — half  coin  and  half  convertible  paper.  Now, 
suppose  the  aggregate  should  be  increased  to  $5,000- 
000,000,  by  the  issue  of  $1,000,000,000  more  of  convert- 
ible paper,  what  would  be  the  ultimate  consequence  1 
At  first  the  relative  value  of  money  would  be  lessened  ; 
in  other  words,  the  market  price  of  all  other  things 
would  advance  twenty-five  per  cent.  This  would  cause 
the  production  of  gold  and  silver  to  be  unprofitable,  and 
it  would  also  increase  the  profits  on  other  products ; 
whence  it  is  apparent  that  the  production  of  gold  and 
silver  would  be  suspended,  that  their  consumption  in  the 
arts  would  be  increased,  that  the  production  of  other 
commodities  would  also  be  increased,  and  that,  by  these 
influences  the  natural  relation  of  money  to  other  commo- 
dities would  be  restored, — the  only  ultimate  consequence 
being  that  one  quarter  more  of  the  material  of  money 
would  be  converted  into  coin.  Instead  of  consisting  of 
equal  proportions  as  before,  it  would  then  stand  three 
parts  paper  and  one  part  coin,  leaving  the  aggregate  the 
same  as  before  the  disturbance  took  place.  This  is  an 
important  fact  in  the  consideration  of  our  subject,  for  it 
has  been  and  still  is  very  generally  believed,  that  the 
partial  substitution  of  convertible  paper  for  coin  has 
greatly  increased  the  aggregate  of  money  in  circulation. 
I  venture,  however,  to  pronounce  the  opinion  unsound, 
and  to  lay  it  down  as  a  general  principle  that  every 
dollar  of  convertible  paper  money  issued  drives  one  of 
coin  from  the  channels  of  circulation. 

Hitherto  we  have  considered  money  as  a  unit,  or  as  a 


CHAP.  V.]  MONEY.  275 

single  instrument  of  the  commerce  of  the  world.  Next, 
let  us  consider  it  as  divided  into  national  sections.  A 
little  reflection  will  convince  us  that  no  one  of  these  can 
be  either  enlarged  or  diminished,  permanently,  except  in 
obedience  to  the  enlargement  or  diminution  of  the  na- 
tional commerce  whose  instrument  it  is.  If,  for  example, 
the  balance  of  trade,  or  an  over  production  of  coin  or  of 
bank  notes,  gives  one  nation  more  money  than  its  com- 
merce calls  for,  or  more  than  its  relative  proportion  as 
compared  with  other  nations,  there  will  at  once  ensue  a 
general  rise  in  the  prices  of  all  commodities  consumed 
at  home,  leaving  undisturbed  the  market  prices  of  ex- 
portable commodities,  because  these  are  governed  by, the 
prices  current  in  foreign  markets.  Hence,  importations 
are  profitable,  exportations  unprofitable.  Therefore  the 
one  will  diminish,  the  other  increase,  until  the  surplus 
money  is  taken  abroad  to  liquidate  the  adverse  balance 
of  trade ;  and  thus,  after  a  few  vibrations,  the  equili- 
brium will  be  restored. — If  adverse  trade,  or  the  sup- 
pression of  paper  money,  or  the  consumption  of  coin, 
gives  one  nation  less  than  its  due  proportion,  these  in- 
fluences are  inverted  and  money  flows  in  from  abroad. 

The  considerations  now  advanced  clearly  prove,  as  it 
seems  to  me,  that  the  machine  called  Money  is  of  very 
determinate  size  and  shape.  So  obstinate  is  it,  that 
whenever  we  attempt  to  enlarge  one  of  its  sections,  the 
addition  at  once  diffuses  itself  through  the  whole  instru- 
ment, driving  out  as  much  both  of  volume  and  value, 
as  we  may  choose  to  pour  in.  If  we  attempt  to  enlarge 
the  whole  machine  by  a  general  issue  of  convertible 
paper,  the  supply  of  coin  is  at  once  cut  off,  and  a  por- 
tion of  the  existing  coin  equal  to  the  amount  of  paper 
issued,  is  speedily  transferred  from  the  channels  of  cir- 
culation to  bank  vaults  and  to  the  arts;  and  if  we 


276  MONEY.  [PART  n. 

attempt  to  curtail  its  proportions  by  suppressing  paper 
money,  strong  currents  of  gold  and  silyer  at  once  flow  in 
from  their  mineral  fountains,  and  the  vacuum  is  filled 
with  coin.  The  only  way,  therefore,  in  which  the  exist- 
ing aggregate  of  money  in  the  world,  or  the  quantity  in 
any  given  market,  can  be  either  lessened  or  enlarged 
permanently,  is  by  an  increase  or  diminution  of  com- 
merce. It  may  be  well,  however,  to  observe,  that  the 
nominal  quantity  of  money  would  be  affected  by  any 
variation  in  the  cost  of  producing  gold  and  silver  ;  but 
the  value  or  purchasing  power  of  the  aggregate,  which  is 
the  only  material  point  to  be  considered,  would  remain 
the  same. 

What,  then,  it  may  be  asked,  is  the  exact  ratio  oi 
money  and  commerce  ?  Or  to  state  the  question  more 
distinctly  :  At  the  present  cost  of  producing  coin,  what 
quantity  of  money  does  a  given  annual  amount  of  com- 
merce require  7  It  will  be  quite  impossible  to  answer 
this  question  with  precision,  because  the  statistics  oi 
commerce  are  too  imperfect  to  show  its  full  extent  in  an;y 
nation,  or  even  in  any  single  market ;  for  it  must  be 
noticed  that  the  term  commerce  is  here  used  in  its  widesi 
acceptation,  in  which  sense  it  includes  every  purchase  oi 
sale  of  all  sorts  of  property.  If,  however,  besides  know- 
ing the  quantity  of  money  employed  in  a  given  market, 
we  also  knew  how  often  it  changed  hands  annually,  we 
might  then  readily  ascertain  the  extent  of  commerce  IE 
that  market,  and  thus  learn  the  exact  proportion  thai 
the  quantity  of  money  bears  to  the  extent  of  commerce. 
But  here  we  are  likewise  at  fault  for  want  of  sufficienl 
data.  We  should  not,  perhaps,  be  very  wide  of  the 
truth  in  estimating  that  money,  on  an  average,  performs 
its  office  of  measuring  and  transferring  values  about  one 
hundred  times  in  a  year,  by  passing  through  the  hands 


CHAP.    V.]  MONF.V.  277 

of  that  number  of  owners  ;  and  hence  that  the  propor- 
tion of  money  to  annual  commerce  is  as  1  to  100.  Be 
that  however  as  it  may,  it  will  be  sufficient  for  our  pur- 
pose to  know  the  actual  quantity  of  money  which  com- 
merce requires,  and  upon  this  point  the  statistics  of 
money  furnish  the  needful  data. 

Commerce  being  an  expedient  for  permitting  the  divi- 
sion of  employments,  and  money  a  contrivance  for  aiding 
the  operations  of  commerce,  it  may  be  inferred  that  the 
quantity  of  money  required  in  any  given  community 
will  be,  not  strictly  in  proportion  to  its  numbers,  but 
slightly  modified  by  the  extent  to  which  they  have  carried 
the  division  of  employments.  In  confirmation  of  this, 
we  find,  by  the  statistics  of  money,  that  the  people  of 
Great  Britain  and  Ireland  possess  about  $500,000,000, 
which,  reduced  to  a  mean,  is  about  $19  per  head,  whilst 
the  people  of  the  United  States  possess  about  $300,- 
000,000  (say  $220  m.  of  bank  currency  and  $80m.  of  cir- 
culating coin,)  which  is  but  $15  per  head ;  and  it  is  well 
known  that  there  is  greater  division  of  labor,  and  hence 
more  commerce,  in  Britain  than  in  the  United  States. 
The  quantity  of  money  in  fcrreat  Britain  and  Ireland, 
as  here  stated,  is  taken  from  an  estimate  made  by  that 
government  and  submitted  to  Parliament,  a  few  years 
since,  except  that  I  have  added  thereto  the  deposites  in 
banks  payable  on  demand,  which  were  most  strangely 
omitted  in  the  estimate.  The  quantity  of  bank  currency 
in  the  United  States,  as  here  stated,  is  taken  from 
a  document  published  in  the  year  1846  by  the  Trea- 
sury Department  at  Washington.  The  quantity  of 
circulating  coin  in  the  United  States  at  that  period,  ex- 
clusive of  the  amount  held  by  banks,  which  we  must  not 
include  because  it  does  not  circulate,  is  an  estimate  of 
my  owji.  It  is  probably  higher  than  most  men  would 
24* 


278  MONEY.  [PART  n. 

estimate  it,  but  I  consider  it  more  likely  to  be  tmder  than 
over  the  true  quantity.  In  the  document  jilst  referred 
to,  is  given  a  statement  of  the  amount  of  currency  fur- 
nished by  the  banks  of  the  United  States  for  each  year 
from  1834  to  1845  inclusive  ;  from  which  it  appears,  that 
notwithstanding  the  mischievous  expansions  and  contrac- 
tions which  that  method  of  furnishing  money  has  pro- 
duced in  our  section  of  the  machine — forcing  our  aggre- 
gate of  money  sometimes  forty  per  cent,  above  its  natural 
quantity,  and  at  others  as  much  below — yet  the  average 
for  the  twelve  years  was  about  the  same,  in  proportion  to 
population,  that  it  was  in  1846  ;  from  which  we  may 
conclude  that  our  section  of  the  machine  was  then  at  its 
natural  size,  or  gravitating  point.  In  other  words,  that, 
at  the  present  cost  of  producing  gold  and  silver,  a  mean 
of  fifteen  dollars  per  head  is  the  quantity  of  money  that 
our  commerce  requires,  and  which  the  natural  laws  of 
trade  will  give,  whether  the  money  consists  of  coin  ex- 
clusively, or  of  coin  and  its  paper  representative.  To 
Britain  they  will  give  more  because  her  people  are  more 
commercial  than  ours  ;  to  other  nations  they  will  give 
less  because  their's  are  less  commercial,  so  that  the  United 
States  may  be  considered  about  a  fair  standard  by  which 
to  estimate  the  quantity  of  money  required  by  commerce 
in  the  aggregate.  Therefore,  the  natural  ratio  of  money 
(when  expressed  in  dollars)  and  population,  is  as  15  to  1. 
But,  as  already  intimated,  this  ratio  would  be  disturbed 
by  any  variation  in  the  cost  of  producing  gold  and  silver, 
or  either  of  them  ;  and  in  view  of  the  extraordinary 
deposits  of  gold  which  are  said  to  have  been  discovered 
recently  in  California,  it  may  be  useful  to  illustrate  the 
point  briefly. 

The  precious  metals,  like  every  other  valuable  pro- 
duct,  are  obtained  by  the  joint   service  of  skill,  labor, 


CHAP.    V.]  MONEY. 


capital  and  land  ;  and  their  true  value,  which  is  but 
another  name  for  that  service,  is  equal  to  the  cost  of  pro- 
duction plus  average  profits.  The  four  prime  agents  con- 
tribute equally  in  their  production,  and  the  proprietors 
of  each  receive  an  equal  share  of  the  gross  profits.. 
True,  where  the  mines  are  rich  their  proprietors  receive 
more  than  one  fourth  of  the  profits,  and  where  the  mines 
are  poor  they  receive  less  than  that  proportion  ;  but 
taken  collectively,  their  revenue  is  subject  to  the  same 
law-  of  distribution  which  we  found  to  preside  over  pro- 
duction in  general.  When  new  and  richer  mines 
are  discovered  they  are  at  once  invested  with  a  high 
market  value,  but  the  market  value  of  other  mines 
is  depressed  in  the  aggregate  to  nearly  the  same  ex- 
tent; the  poorest  are  even,  abandoned.  Consequently, 
sueh  discoveries  increase  the  quantity  of  these  metals  pro- 
duced by  a  given  amount  of  industry,  capital  and  land  ;: 
in  other  words,  they  lessen  the  cost  of  gold,  or  of  silver, 
as  the  case  may  be.  With  cost  of  production  dimin- 
ished, and  the  market  value  of  the  product  remain- 
ing undistured,  the  profits  are  of  course  enhanced.  The 
enhanced  profits  not  only  stimulate  the  productive  forces 
already  engaged  in  the  pursuit,  but  attract  others,  by 
which  means  the  production  is  enlarged.  The  enlarged 
production  depresses  the  market  value  until  it  settles 
below  the  true  value  ;  but,  as  in  the  case  of  all  other 
products,  it  will  ultimately  conform  to  that  standard. 
Therefore  the  quantity  of  money  will  increase  in  exact 
proportion  to  the  diminished  cost  of  producing  coin. 
For  example  :  if,  by  the  discovery  of  richer  mines,  or  by 
improvements  in  the  arts  of  mining  and  metallurgy,  gold 
and  silver  should  hereafter  be  produced  25  per  cent. 
cheaper  than  at  present,  it  would  ultimately  increase  the 
quantity  of  money  in  circulation  33  £  per  cent.,  or  from 


280  MONEY.  [PART  n. 

$15  to  $20  per  head,  and  vice  versa.  While,  however, 
it  would  thus  increase  the  quantity,  the  aggregate  value 
would  remain  as  at  present ;  for  it  must  be  remembered 
that  whenever,  from  permanent  causes,  any  class  of  com- 
modoties  are  produced  at  cheaper  rates,  the  value  of  those 
previously  produced  at  higher  rates  is  brought  down  to  the 
same  level.  True  value  is  to  be  estimated  in  all  cases, 
not  by  what  the  product  actually  cost,  but  by  the  cost  at 
which  one  equally  useful  could  be  produced  at  the  time 
the  estimate  is  made. 

But  we  have  not  yet  solved  the  problem  presented  by 
the  recent  discoveries  in  California.  That  case  has  had 
no  exact  parallel ;  and  if  the  accounts  received  from 
there  be  not  gross  exaggerations,  the  history  of  wealth 
affords  nothing  approaching  a  parallel.  It  is  represent- 
ed, for  instance,  that  over  large  districts  of  that  terri- 
tory, gold  is  scattered  in  such  profusion  that  an  unskilled 
laborer,  with  the  rudest  of  implements,  may  gather  on 
an  average  more  than  an  ounce  of  the  pure  metal  per  day, 
and  that  the  supply  is  inexhaustible.  These  are  the 
most  sober  of  the  accounts  received,  while  others  repre- 
sent that  large  masses,  and  even  large  mines  of  pure 
gold  have  been  discovered.  But  discarding  these  as 
fabulous,  let  ns  assume  that  the  more  sober  accounts  arc 
true,  and,  after  clothing  the  facts  with  the  extraordinary 
circumstances  by  which  they  are  surrounded,  attempt  to 
trace  out  their  consequences. 

The  gold  is  discovered  in  California  simultaneously 
with  the  transfer  of  the  ownership  of  that  province  from 
Mexico  to  the  United  States,  and  before  the  latter  has 
extended  her  laws  over  it.  The  laws  of  Mexico  are 
annulled,  those  of  the  United  States  are  not  yet  estab- 
lished, nor  arc  they  -likely  to  be  soon  :  conflicting  opin- 
ions in  reference  to  slavery  bid  fair  to  prevent  it  for  a 


CHAP.    V.]  MONEY.  281 

year  or  two  at  least.  Meantime,  adventurers  from  all 
quarters  of  the  globe  are  flocking  thither  in  numbers  so 
yast  that  a  few  years  bids  fair  to  give  the  province  a 
population  of  millions.  They  gather  the  gold  without 
paying  ground  rent,  and  almost  without  the  aid  of  skill 
or  capital.  There  is  but  one  partner  in  the  productive 
firm,  namely,  Labor;  and  each  proprietor  of  labor, 
instead  of  receiving  the  ordinary  reward  of  one  dollar  per 
day,  receives  $20.  When  the  United  States  gets  ready 
to  establish  a  government  there,  and  to  take  possession 
of  her  lands,  preparatory  to  their  survey  and  sale,  it  is 
not  likely  that  such  men,  thus  employed,  will  be  in  the 
proper  temper  to  submit.  We  may  rather  suppose  that 
they  will  feel  inclined  to  keep  the  mineral  lands  common 
property,  in  order  that  they  may  continue  to  engross  the 
whole  proceeds  of  their  labor.  If  thai  should  prove  to 
be  the  event,  and  if  the  gold  is  really  as  abundant  and 
inexhaustible  as  represented,  then  the  ultimate  con- 
sequence would  be  an  enlargement  of  the  money  ma- 
chine to  twenty  times  its  present  volume,  or  to  $300  per 
head,  leaving  the  aggregate  value  thereof  the  same  as 
now.  But  if,  on  the  other  hand,  the  government  should 
succeed  in  getting  possession  of  the  mineral  lands,  and 
should  divide  them  into  lots  and  sell  them  to  the  highest 
bidders,  then  the  production  of  gold  there,  as  elsewhere, 
would  soon  range  itself  under  the  natural  laws  of  trade, 
which,  as  we  have  seen,  award  one  half  the  revenue  to 
industry  and  the  other  half  to  the  proprietors  of  the 
concurring  capital  and  land.  In  that  event,  therefore, 
the  ultimate  consequence  of  the  facts  assumed  would  be 
a  tenfold  increase  of  the  quantity  of  money,  say  from 
$15  per  head  to  $130.  This  enlargement  would  of 
course  consist  of  gold  coin  alone.  In  fact  silver  would 
be  entirely  expelled  from  the  money  machine,  and  the 


252  MONEY.  [PART  n. 

place  it  now  occupies  therein,  as  well  as  the  enlargement, 
would  be  filled  by  gold,  unless  the  relative  value  of  the 
two  metals,  as  now  established  by  law,  should  be  modi- 
fied in  conformity  with  the  change  in  their  relative  cost 
of  production.  The  relative  value  of  gold  and  silver,  as 
now  established  by  law>  is  as  15T2j  to  1,  which  ratio- 
probably  coincides  very  nearly  with  their  relative  cost* 
But  if  ten  ounces  of  gold  shall  hereafter  be  produced  by 
the  same  amount  of  productive  service  now  expended  in 
the  production  of  one  ounce,  it  follows  that  the  relative 
value  of  gold  an.d  silver  will  stand  as  15T2i  to  10.  The 
true  value  of  silver  will  not  be  disturbed,  but  gold  will 
possess  no  more  than  one-tenth  the  quantity  of  that 
attribute  which  it  does  at  the  present  time. 

Now  it  is  interesting  to  inquire,  whether,  upon  the 
happening  of  such  a  contingency,  governments  would 
permit  silver  to  be  expelled  from  its  office  as  money  ;  or 
whether  they  would  attempt  to  approximate  the  legal 
value  of  the  two  metals  in  conformity  with  the  approxi- 
mation of  their  cost,  so  as  to  retain  both  in  circula- 
tion; and  if  the  latter,  by  what  me&ns  they  would 
accomplish  it.  They  could  not  with  propriety  or  jus- 
tice change  either  the  weight,  quality,  or  name  of  the 
silver  dollar,  since  no  change  occurs  in  the  cost  of  pro- 
ducing it.  Therefore  they  would  have  to  change  either 
the  weight,  quality,  or  denomination,  of  gold  coins. 
The  eagle,  for  instance,  if  left  at  its  present  weight  and 
fineness,  would  have  to  be  called  a  dollar ;  or  if  its  name 
and  its  present  legal  value  were  retained,  its  weight  or 
the  quantity  of  pure  metal  which  it  now  contains,  would 
have  to  be  increased  tenfold .  An  ordinance  of  that 
kind  would  inflict  heavy  losses  on  banks  and  all  other 
large  holders  of  gold  coin,  but  it  would  be  the  legitimate 
consequence  of  holding  a  commodity  that  had  been  depre- 


CHAP.    V.J  MONEY.  283 

ciated  in  value  by  a  reduction  in  the  cost  of  producing 
other  commodities  like  it ;  whereas,  if  the  legal  value  of 
the  coin  should  be  retained,  in  the  face  of  a  diminu- 
tion of  ninety  per  cent,  in  its  true  value,  it  is  obvious 
that  the  holders  of  annuities  and  mortgages,  and  in  fact 
all  creditors  of  every  class,  would  be  robbed  of  nine- 
tenths  of  their  rightful  dues,  and  that  the  debtor  class 
would  be  benefited  to  the  same  extent.  Therefore,  it 
would  be  most  politic  and  just  to  continue  the  use  of 
silver  as  money  ;  and  to  do  it  either  by  increasing  the 
•weight  and  fineness  or  by  lowering  the  denomination 
of  gold  coins,  in  proportion  to  their  diminished  cost ; 
leaving  the  weight,  quality,  name,  and  legal  value  of  the 
silver  dollar,  as  well  as  all  other  coins  of  that  metal,  the 
same  as  they  are  at  present. 

It  is  scarcely  necessary  to  remark  that  the  assumption 
on  which  the  preceding  speculations  are  based  is  not 
believed  to  be  literally  true.  The  statements  received 
from  California  are  assumed  to  be  true  in  their  whole 
length  and  breadth,  merely  for  the  purpose  of  deducing 
the  monetary  consequences  of  the  facts  asserted,  in  case 
they  prove  to  be  facts.  So  far  as  relates  to  the  abun- 
dance of  gold  in  certain  localities,  and  to  the  facility 
with  which  it  may  be  obtained  at  present,  the  accounts 
may  doubtless  be  relied  on  as  correct.  But  with  re- 
gard to  the  extent  of  the  placers,  and  especially  to  their 
inexhaustibleness,  the  statements  are  at  best  mere  con- 
jectures, which,  it  is  riot  at  all  likely,  will  be  fully  verified 
by  a  more  exact  knowledge  of  the  facts  ;  and  if  they  are 
not,  the  consequences  I  have  deduced  will  not,  of  course, 
ensue.  There  can  be  little  doubt,  however,  that  there 
will  be  found  enough  of  truth  in  these  representations  to 
dimmish  in  some  degree  the  average  cost  of  producing 
gold ;  and  hence  that  the  money  machine  will  be  some- 


284  CONVERTIBLE    PAPER    MONEY.  fl'ART    II. 

what  enlarged,  and  that  the  market  price  of  other  com- 
modities will  be  in  an  equal  degree  enhanced,  unless 
governments  alter  either  the  denomination,  the  weight,  or 
the  fineness  of  gold  coins.  Temporarily,  indeed,  these 
effects  are  certain  to  ensue,  because  the  amount  of  coin 
will  be  for  a  time  somewhat  enlarged,  and  for  the  addi- 
tional reason,  that  convertible  paper  money  is  certain 
to  increase  in  the  same  ratio ;  but  both  will  return  to 
their  present  quantity  whenever  the  California  deposits 
shall  have  been  so  far  exhausted  that  the  cost  of  produ- 
cing gold  there  will  be  equal  to  the  present  average  cost 
of  producing  it  elsewhere.* 


SECTION  2. 
Of  Convertible  Paper  Money. 


The  invention  of  convertible  paper  money  may  be 
regarded  as  an  ingenious  but  most  unfortunate  attempt 
to  avoid  two  of  the  objections  which  I  have  shown  may  be 
fairly  urged  against  money  in  the  form  of  coin  ;  namely, 
the  expensiveness  and  the  weight  of  its  material.  The 
attempt  must  be  called  ingenious  since  it  has  succeeded 
to  some  extent  in  dispensing  with  the  use  of  coin,  by 
filling  its  place  with  paper  promises ;  it  is  unfortunate 
because  it  has  produced  evils  which  far  surpass  its  bene- 
fits, as  will  be  shown  in  the  progress  of  this  section. 

*  It  is  proper  to  remark  that  the  views  here  presented  in  reference  to  the  discovery  of 
gold  in  California,  and  its  probable  effects  on  the  currency,  were  penned  in  January, 
1849,  at  w-hich  time  our  information  on  that  subject  was  less  definite  and  less  authentic 
than  at  present.  The  facts  do  not,  however,  differ  materially  from  those  which  I  then 
assumed  to  be  true,  nor  do  their  monetary  effects,  so  far  as  they  are  yet  developed,  differ 
from  those  which  I  then  ventured  to  predict.  Therefore,  I  have  not  thought  it  worlli 
while  either  to  recast  or  modify  what  I  had  written  on  this  subject,  so  as  to  adapt  it  to 
our  present  enlarged  knowledge  of  the  facts  in  the  case. 


CHAP.  V.]         CONVERTIBLE    PAPER    MONEY.  285 

Let  us  first  look  at  the  conception  and  plan,  and  then 
at  the  processes  by  which  this  sort  of  money  is  pro- 
duced. 

The  idea  of  its  projectors  appears  to  have  been 
simply  this :  to  add  another  section  to  the  money  ma- 
chine, as  they  found  it  existing  in  the  form  of  coin,  by 
engrafting  it  with  paper  promises.  And  the  plan  was,  to 
take  from  the  channels  of  circulation  a  given  quantity 
of  coin,  to  hold  it  in  possession,  and  to  send  to  those 
channels,  two,  three,  or  four  times  the  quantity  of  paper, 
bearing  on  its  face  a  promise  of  redemption  in  coin  when- 
ever demanded.  This  is  all  there  is  of  genius  in  the 
invention.  The  plan  has  been  carried  out,  or  practically 
applied,  by  what  are  termed  banks  of  discount,  deposite 
and  circulation.  It  will  be  useful  to  present  an  illustra- 
tion of  their  processes. 

We  will  suppose  one  of  these  paper  money  mills,  or 
monied  institutions,  as  they  are  ambitiously  termed,  to 
commence  business  with  a  cash  capital  of  $100,000,  in 
coin.  It  commences  discounting  mercantile  paper— that 
is,  it  gives  its  own  bills,  payable  on  demand,  in  exchange 
for  notes  payable  at  a  future  day,  less  the  discount.  It 
at  the  same  time  begins  to  receive  deposites  of  money  in 
the  shape  of  its  own  bills  and  the  bills  of  other  banks. 
These  it  in  turn  gives  out  in  exchange  for  more  mercantile 
paper,  less  the  discount.  We  will  suppose  this  process  to 
go  on  until  the  bank  holds  discounted  paper  to  the  amount 
of  $300,000,  exclusive  of  the  discount  charged  on  it ;  and 
that  it  still  retains  the  $100,000  of  coin.  It  will  be 
perceived  that  it  must  then  owe  to  its  depositors  and  to 
the  community  for  circulating  bills  $300,000 — say  $100,- 
000  to  the  former,  and  $200,000  to  the  latter.  In  this 
supposition,  therefore,  the  bank  first  takes  from  the 
channels  of  circulation  $100,000  of  money,  in  coin, 
25 


286          CONVERTIBLE  PAPER  MONEY.     [PART  II. 

which,  after  having  gone  through  the  multiplying  process 
of  bank  representation,  returns  to  those  channels  in 
the  form  of  $300,000  convertible  paper,  or  bank  cur- 
rency— namely,  $200,000  of  bank  note  circulation,  and 
$100,000  due  depositors  on  demand.  The  item  last 
named,  although  it  be  no  where  in  existence,  (for  neither 
the  bank  nor  the  depositors  really  possess  it,)  is  as  truly 
money,  and  performs  its  office  as  well,  as  the  notes  in 
actual  circulation;  because,  whenever  depositors  find 
use  for  their  money,  the  bank  is  compelled  either  to  pay 
them  in  coin  or  to  increase  to  that  extent  its  issue  of  bills. 
And  if  they  should  all  simultaneously  demand  their 
deposites,  and  the  bank  should  pay  them  in  bills,  its  cir- 
culation would  of  course  be  increased  to  the  full  extent 
of  the  deposites.  The  truth  is,  the  money  of  the  mer- 
chant, or  capitalist,  deposited  in  bank  for  safety  or 
convenience,  is  as  truly  in  circulation  as  that  which  he  or 
others  carry  in  their  pockets.  It  seems  strange  that  a 
fact  so  obvious  and  so  important  as  this,  should  have 
been  overlooked  by  most  writers  on  the  subject  of  paper 
money. 

This  bank,  then,  having  taken  $100,000  of  coin  and 
transformed  it  into  $300,000  of  convertible  paper,  has 
increased  the  quantity  of  circulating  money  $200,000. 
The  increase,  however,  is  only  temporary,  since,  as  I 
have  already  shown,  it  results  ultimately  in  a  mere  sub- 
stitution of  convertible  paper  for  coin,  by  driving  from 
the  channels  of  circulation  an  equal  amount  of  the  lat- 
ter. A  very  simple,  yet  certain  rule  for  ascertaining 
the  extent  to  which  banks  first  increase  the  quantity,  but 
finally  merely  change  the  quality  of  money,  is,  to  sub- 
tract the  amount  of  capital  paid  in  from  the  gross  amount 
of  loans  and  all  other  investments  :  the  difference  will 
be  the  true  answer. 


CHAP.  V.]    CONVERTIBLE  PAPER  MONEY.          287 

Such  is  a  brief  outline  of  the  process  by  which  con- 
vertible paper  is  engrafted  on  money,  and  made  to  per- 
form a  share  of  its  services.  In  the  case  just  assumed 
and  presented  as  an  illustration,  we  found  that  the  locking 
up  of  one  dollar  of  money,  in  the  form  of  coin,  set  free 
three  dollars  in  the  form  of  convertible  paper ;  and  this 
is  probably  about  the  ratio  of  transformation  which  ac- 
tually takes  place  under  the  banking  system  as  it  now 
exists.  Therefore,  while  the  paper  dollar  purports  to 
represent  a  dollar  of  coin,  it  in  fact  represents  but  the 
third  part  of  a  dollar.  But  since  all  who  desire  to 
do  so,  may  exchange  it  for  a  whole  dollar  of  coin,  it  of 
course  performs  the  office  of  a  whole  dollar.  Seeing, 
however,  that  its  representative  character  is  in  part 
fictitious,  and  knowing  that  it  often  proves  altogether 
fallacious,  we  may  naturally  ask,  why  will  people  receive 
it  as  money  ?  Why  will  they  accept  the  shadow  in  place 
of  the  substance  ?  The  answer  is  to  be  found,  first,  in  its 
superior  convenience  ;  secondly,  in  the  belief  that  it  can  be 
converted  at  pleasure  into  coin  ;  and  thirdly,  in  that  in- 
tense and  universal  desire  for  money  which  springs  from 
its  recognition  as  the  standard  of  value,  and  from  its  being 
the  chosen  instrument  for  satisfying  contracts.  la 
virtue  of  these  attributes,  money  has  the  power  of  com- 
manding the  presence  of  any  desired  commodity  of  value. 
It  is  the  immediate  agent  for  supplying  the  objects  of 
all  wants  and  desires  which  wealth  is  capable  of  minis- 
tering to.  Not  so  with  other  commodities.  Generally, 
they  can  only  be  exchanged  for  money,  and  not  for  tho.t 
until  the  proper  market  and  purchaser  have  been  found, 
which  is  always  difficult  and  sometimes  impracticable. 
In  short,  with  money  in  possession,  we  have  but  one  ex- 
change to  make  in  order  to  secure  the  object  of  desire, 
while  with  other  surplus  products  we  have  two,  the  first 


288         CONVERTIBLE  PAPER  MONEY.      [PART  II. 

of  which  (securing  the  money)  is  infinitely  more  difficult 
than  the  second. 

It  is  to  these  considerations  that  we  must  attribute  the  t 
willingness  of  men  accept  the  shadow  of  money  in  lieu 
of  its  substance.  All  men  of  ordinary  sagacity  know 
that  the  representative  character  of  convertible  paper 
money  is,  in  part  at  least,  an  ingenious  fiction ;  and 
hence,  that  if  any  considerable  portion  of  the  bill  holders 
and  depositors  of  the  best  managed  bank  should  simul- 
taneously demand  payment,  they  must  be  refused.  They 
know,  too,  that  when  adverse  trade  or  other  cause  creates 
a  panic,  the  whole  fraternity  of  banks  shut  themselves 
up  in  their  shells  like  so  many  tortoises.  It  is  known 
also,  from  bitter  experience,  that  the  want  of  security 
which  attaches  to  this  sort  of  money  is  not  imaginary, 
since  the  holders  of  it  in  the  United  States  have  lost 
within  the  brief  period  of  its  existence  here,  more  than 
$100,000,000  by  broken  banks  and  depreciated  bills,  to 
say  nothing  of  the  still  heavier  losses  incurred  by  share- 
holders. And  yet  we  find  that  the  desire  of  money, 
combined  with  the  superior  convenience  of  the  paper 
material,  leads  men  possessing  a  full  knowledge  of  the 
hazards,  not  only  to  accept  the  substitute  but  to  receive 
it  with  alacrity. 

But  how,  it  may  be  asked,  does  it  supplant  the  coin  1 
I  answer,  simply  by  filling  the  measure  of  money  too 
full,  or  rather,  by  attempting  to  heap  it  up,  for  it  is 
always  as  full  as  the  fluid  nature  of  its  functions  will 
bear.  It  has  been  shown,  for  instance,  that  whenever 
the  enlargement  of  a  particular  locality  or  section  is 
attempted,  the  increase  first  diffuses  itself  throughout 
the  whole  machine,  and  afterwards  disappears ;  and 
inasmuch  as  paper  money,  like  every  other  commodity, 
gravitates  towards  its  market  of  greatest  value;  which, 


CHAP.    T.]  CONVERTIBLE    PAPER    MONEY.  289 

with  this,  is  its  place  of  redemption,  it  follows  necessar- 
ily that  the  surplus  taken  away  and  diffused,  must  be  in 
coin,  which  is  of  uniform  value  everywhere. 

It  now  remains  to  inquire  whether  convertible  paper 
has  any  other  recommendation  than  that  of  superior 
convenience.  This  is  clearly  the  only  benefit  that  the 
community  at  large  derive  from  its  use ;  for  although 
its  material  is  much  less  expensive  than  that  of  coin,  yet 
no  one  ever  received  from  the  banks  a  single  dollar  of  it 
without  giving  in  exchange,  or  promising  to  give,  an 
amount  of  value  equal  to  that  which  it  purports  to  repre- 
sent, and  which  really  belongs  to  the  material  of  coin. 
I  am  aware  that  the  popular  opinion  is,  that  banks  / 
increase  the  quantity  of  money,  and  that  this  is  benefi- 
cial to  the  community.  The  premiss  I  have  already 
shown  to  be  false,  and  with  that  the  inference  must  fall. 
Besides,  the  inference  is  not  legitimate.  So  far  from  it, 
indeed,  that,  if  it  were  true  that  banks  increase  the 
quantity  of  money  in  circulation,  they  would  be  vastly 
more  mischievous  than  they  really  are. 

If,  then,  there  are  other  benefits  inherent  in  this  sys- 
tem, they  must  inure  to  the  banks  themselves.  The 
invention  has  obviated  the  necessity  of  value  in  the 
materials  of  money,  to  an  extent  precisely  equal  to  the 
excess  of  bank  discounts  and  other  investments  over 
bank  capital.  That  excess  is  known  to  be  large,  and 
the  profits  thence  resulting,  necessarily  accrue  to  the  banks 
themselves,  since  they  receive  interest  on  the  amount 
without  possessing  the  capital.  They  also  gain  the 
principal,  as  well  as  the  interest,  on  that  portion  of  their 
circulating  bills  which  are  never  returned  for  redemp- 
tion. When,  in  addition  to  these  advantages,  which  are 
legitimate  fruits  of  the  invention,  it  is  considered  that 
banks  are  usually  invested  with  the  attribute  monopoly, 
25* 


290  CONVERTIBLE    PAPER    MONEY.  [PART    II. 

which  screens  their  profits  from  the  equalizing  tendencies 
of  the  natural  laws  of  trade,  we  might  readily  conclude 
that  the  production  of  convertible  paper  money  is  highly 
profitable  to  those  engaged  in  it : — under  that  impression 
men  become  shareholders  in  banks.  It  is  familiar  knowl- 
edge, however,  that,  in  this  country  at  least,  no  other 
business  has  been  equally  disastrious.  How  shall  we  ac- 
count for  a  result,  apparently  so  unnatural  1  In  the  first 
place  I  think  we  may  safely  attribute  many  bank  disasters 
to  the  want  of  knowledge  and  skill  on  the  part  of  those 
engaged  in  the  business ;  and  in  the  second  place, 
to  the  demoralizing  tendencies  of  the  business  itself, 
which  has  been  found  to  stimulate  the  dishonest  propen- 
sities of  so  many  of  the  managers  and  clerks. 

In  evidence  of  the  prevailing  ignorance  on  the  subject, 
it  may  be  observed  that  there  is  scarcely  a  state  in  the 
Union  but  that  has  permitted,  by  special  grants,  a  greater 
extent  of  banking  than  would  have  been  established  by 
the  natural  laws  of  trade  if  left  to  themselves.  They 
have  thus,  without  perceiving  the  fact,  virtually  des- 
troyed the  very  monopolies  they  designed  to  grant. 
Now  York  and  some  other  states  have  wisely  abandoned 
the  old  system  of  special  grants,  and  have  thrown  open 
the  business  to  all  who  will  conform  to  prescribed  condi- 
tions. This  is  an  advance  in  the  right  direction,  since 
the  new  system  is  more  equitable  and  more  secure  than 
those  which  it  supersedes  ;  but  it  has  not  reached  the  root 
of  the  evil.  The  radical  defect  in  our  banking  system  I 
conceive  to  be  the  absence  of  individual  liability  on 
the  part  of  shareholders.  The  origin  of  most  of  those 
disasters,  and  consequent  losses  to  proprietors  and 
creditors,  which  we  find  recorded  in  every  page  of  its 
history,  may  be  clearly  traced  to  that  fatal  omission  ; 
and  yet,  strange  as  it  may  appear,  a  large  majority  of 


CHAP  V.]  CONVERTIBLE    PAPER    MONEY.  291 

both  classes  of  sufferers  have  pertinaciously  resisted 
every  attempt  to  engraft  on  the  system  that  just  and 
effectual  expedient  for  increasing  their  security.  With 
that  simple  clause  inserted  in  bank  charters, .we  should 
not  find  their  affairs  placed  under  the  management  of  those 
who  were  either  needy,  incompetent,  or  unworthy  of  confi- 
dence. Nor  should  we  then  find,  as  we  now  do  in  some 
instances,  a  board  of  directors  owning  less  than  the  twen- 
tieth part  of  the  capital  over  which  they  preside.  To  loan 
money  securely  and  well,  requires  the  keen  sagacity  of 
personal  interest. 

But  even  if  the  science  of  banking  were  thoroughly 
understood,  the  art  perfect,  and  its  processes  guided  by 
enlightened  and  skilful  owners,  the  business  would  not 
then  be  so  profitable  as  we  are  apt  to  imagine.  If 
thrown  open  to  the  whole  community,  competition  would 
of  course  bring  its  profits,  ultimately,  to  correspond 
with  those  of  all  other  departments  of  production.  But 
I  mean  to  say,  that  if  confined  to  the  favored  few,  by 
special  laws,  the  profits  would  not  be  much  if  any  higher 
than  the  average.  A  few  words,  in  explanation  of  the 
manner  in  which  banks  create  valuev  will  demonstrate 
the  correctness  of  this  assertion. 

Banking,  like  mining,  metallurgy  and  coining,  pro- 
duces money,  but  it  is  of  a  kind  which  loses  its  value 
when  returned  and  redeemed  ;  and  as  this  occurs  sooner 
or  later  with  nearly  all  that  it  issued,  it  follows  that  the 
only  value  created  by  the  production  of  convertible  paper 
money,  is  the  amount  of  interest,  while  in  circulation, 
of  the  gross  quantity  produced,  together  with  the  princi- 
pal of  that  portion  which  is  lost  or  destroyed.  The 
only  other  source  of  revenue  in  legitimate  banking  is, 
interest  on  the  actual  capital,  which,  it  is  well  known, 
may  be  obtained  as  readily  and  more  securely  without 


292          CONVERTIBLE  PAPER  MONEY.      [PART  II. 

resorting  to  that  expedient.  Now,  before  we  can  de- 
termine the  net  profits  of  any  pursuit,  we  must  ascertain 
the  cost,  and  deduct  it  from  the  gross  value  produced. 
The  cost  of  producing  convertible  paper  money  consists, 
1,  of  the  paper,  plates,  and  printing  of  the  bills ;  2,  of 
the  rent  or  use  of  banking  houses ;  3,  of  furniture, 
books,  stationary,  &c.  ;  4,  of  the  salaries  paid  to  officers 
and  clerks  ;  5,  of  losses  by  frauds,  forgeries,  over-drafts 
and  insolvencies.  If  these  expenses,  and  these  unavoid- 
ble  losses,  which  to  some  extent  must  occur  in  the  bu- 
siness of  a  skilfully  managed  and  fortunate  bank,  be 
added  together,  it  may  be  inferred  that  they  about  equal 
the  value  produced — that  is,  they  absorb  the  interest 
received  on  the  excess  of  loans  over  capital,  together 
with  the  principal  of  circulating  notes  lost  and  destroyed 
— leaving  to  the  stockholders  nothing  more  than  interest 
on  their  capital,  which  it  would  have  earned  with  far 
greater  certainty  if  directly  loaned  by  themselves.  If 
we  make  a  similar  estimate  where  either  skill  or  integ- 
rity, or  both,  have  been  wanting  in  the  officers  and  man- 
agers, we  may  expect  to  find  that  the  expenses  and  losses 
absorb  not  only  the  entire  value  created,  but  in  addi- 
tion, some  portion  of  the  capital  and  its  revenue ;  and 
in  extreme  cases,  the  whole  of  these  together  with  the 
value  of  the  circulating  notes  and  deposites.  These 
inferences,  fairly  deducible  from  the  nature  of  the  bu- 
siness, are  completely  verified  by  experience  and  obser- 
vation;  and  they  warrant  the  general  conclusion,  that, 
when  viewed  as  a  department  of  business,  the  production 
of  convertible  paper  money  has  not  been,  nor  is  it  likely 
to  be,  profitable  to  those  engaged  in  it. 

The  worst  feature  of  this  invention  remains  to  be 
noticed.  Its  tendencies  are  eminently  demoralizing. 
By  its  alternate  and  ever  recurring  expansions  and  con- 


CHAP.    V.J  CONVERTIBLE    PAPER    MONEY.  293 

tractions  of  the  money  machine,  it  keeps  the  standard 
of  value  constantly  vibrating.  This  unsettles  business 
as  -well  as  prices  ;  it  makes  fortunes  and  mars  them  ;  it 
excites  men's  gambling  propensities,  which  are  sufficiently 
strong  by  nature ;  it  leads  to  recklessness,  extravagance, 
and  immoral  practices.  These  influences  are  felt,  less  or 
more,  by  the  whole  community,  while  to  those  employed 
in  the  paper  money  laboratories,  the  temptations  to  fraud 
and  peculation  are  so  strong,  and  the  opportunities  so 
inviting,  that  many  men  of  ordinary  honesty  are  thereby 
turned  into  rogues. 

Another  evil  consequence  of  this  method  of  producing 
money  deserves  a  passing  notice — namely,  its  tendency, 
when  aided  by  restrictions  on  external  commerce,  to 
keep  the  measure  of  money  too  full. — From  what  has 
been  shown  of  the  nature  and  uses  of  money,  we  may 
safely  conclude  that  the  desire  for  that  article  can  never 
be  fully  satisfied  ;  and  hence,  that  the  supply  can  never 
equal  the  demand.  But  since  we  know  that  the  market 
value  sinks  as  the  supply  increases,  we  may  readily  infer 
that,  when  money  passes  at  the  market  value  of  the 
material  whereof  it  is  made,  as  is  the  case  with  coin,  the 
supply  will  be  kept  within  the  limits  of  profitable  pro- 
duction. This  natural  veto  on  the  excessive  production 
of  coin,  is  inoperative  when  applied  to  an  excessive  issue 
of  convertible  paper,  because  the  market  value  of  the 
latter  is  not  dependent  on  the  cost  of  production.  But 
for  restraining  that  evil,  nature  has  provided  another 
law  equally  effective — namely,  the  adverse  balance  there- 
by produced  in  external  commerce,  and  the  consequent 
abstraction  of  the  specie  basis  of  the  paper  issues,  which 
compels  the  banks  to  curtail  their  circulation  or  fail, 
either  of  which  alternatives  will  divest  money  of  its  sur- 
plus quantity.  Where  international  commerce  is  pro- 


294       CONVERTIBLE  PAPER  MONEY.       [PART  II. 

hibited,  this  natural  restraining  law  is  of  course  annulled, 
and  as  a  consequence,  a  mixed  currency,  consisting  of 
coin  and  convertible  paper,  is  no  longer  a  true  measure 
of  value,  but,  on  the  contrary,  altogether  arbitrary  and 
uncertain.  Where  external  commerce  is  trammeled  by 
the  imposition  of  duties  on  imports,  the  consequences 
are  somewhat  analagous.  These  duties,  for  example, 
first  diminish  imports  by  protecting,  and  thus  increasing 
the  production  of,  their  domestic  rivals.  This  brings  in 
coin  to  restore  the  balance  of  trade ;  the  coin  increases 
the  basis  of  convertible  paper,  whereupon  the  banks 
increase  their  issues,  which  enhances  prices  and  checks 
exports.  The  inflation  of  money  and  consequent  en- 
hancement of  prices  go  on  increasing  until  an  excess  of 
imports  is  called  in,  by  the  high  prices,  sufficient  to 
carry  away  a  part  of  the  coin,  which,  in  its  turn,  forces 
in  the  excessive  issue  of  paper,  and  generally  with  so 
much  suddenness  that  the  result  is  an  explosion — or 
more  properly,  a  collapse  of  the  banking  system.  These 
consequences  are  not  only  legitimate  but  inevitable,  be- 
cause, as  we  have  just  seen,  the  only  restraint  upon  bank 
expensions  is  the  fear  of  losing  coin.  The  different 
banks  of  the  same  country  would,  however,  be  a  check 
upon  each  other,  were  it  not  for  the  well  known  fact  that 
their  managers  all  become  excited  at  the  same  time  ; 
and  worse  still,  they  inoculate  the  whole  community  with 
their  madness. — It  may  be  said,  therefore,  that  conver- 
tible paper  money,  when  co-existent  with  tariff  laws, 
tends  to  keep  the  measure  of  money  too  full,  besides 
causing  the  standard  of  value  to  vibrate  more  suddenly, 
and  to  far  more  ruinous  extremes. 

I  have  now  finished  my  survey  of  the  uses  and  pro- 
perties of  money  in  its  two  most  customary  forms  ;  and 
if  the  views  that  have  been  advanced  are  sound,  they 


CHAP.    V.]          CONVERTIBLE    PAPER    MONEY.  295 

establish  the  truth  of  the  conclusions  which  follow — 
viz : 

First,  That  money  in  the  form  of  gold  and  silver 
coins,  although  an  invention  ef  unrivaled  utility,  is, 
nevertheless,  liable  to  three  serious  objections,  namely  : 
it  costs  too  much  to  produce,  it  is  too  heavy  for  conveni- 
ance,  and  it  lacks  the  requisite  uniformity  of  value. 

Secondly,  That  the  invention  of  convertible  paper 
money  was  designed  to  mitigate  two  of  these  defects  by  a 
partial  substitution  of  representative  value  (mainly  ficti- 
tious) for  real  value,  and  a  material  of  paper  for  one  of 
metal. 

Thirdly,  That  while  the  invention  last  named  has 
secured  the  aims  of  its  projectors,  by  partially  avoiding 
the  objections  referred  to,  it  has  produced  other  mis- 
chiefs of  a  far  more  serious  kind,  which  may  be  recapi. 
tula  ted  thus :  1,  It  has  turned  out  that  the  fictitious 
value  of  the  convertible  paper  costs  its  producers  as 
much  or  more  than  it  costs  to  produce  the  coin  which  it 
purports  to  represent :  this,  of  itself,  neutralizes  one  of 
the  two  advantages  anticipated  from  the  invention.  2, 
The  money  thus  produced  has  proved  to  be  insecure ;' 
for  although  it  costs  as  much  to  produce  as  coin,  it  has 
no  value  when  its  producers  become  insolvent,  which 
happens  so  often  that  its  holders  are  subjected  to  im- 
mense losses.  3,  It  is  clemoralizing  and  otherwise  inju- 
rious to  the  general  welfare,  since,  by  its  ceaseless 
expansions  and  contractions  of  the  measure  of  value,  it 
has  thrown  around  commerce,  and  in  fact  every  other 
branch  of  production,  the  chance-like  uncertainties  of 
the  gambling  table.  4,  It  tends,  when  aided  by  tariff 
laws,  to  keep  the  measure  of  money  too  full,  which, 
besides  giving  undue  advantages  to  foreign  nations,  by 
enhancing  the  price  of  imports  while  it  does  not  affect 


296  INCONVERTIBLE    PAPER    MONEY.          [PART    II. 

the  price  of  exports,  is  certain  to  be  followed  by  ruinous 
contractions  or  a  general  suspension  of  specie  payments. 
To  counterbalance  these  great  evils,  convertible  paper 
money  has  but  one  compensating  attribute,  which  in 
comparison  with  them  is  but  as  a  feather  in  the  opposite 
scale — namely,  it  possesses  greater  convenience  than 
coin. 


SECTION  3. 
Of  Inconvertible  Paper  Money. 


Inconvertible  paper  has  often  filled  the  office  of  money? 
but  never,  that  I  am  aware  of,  in  conformity  with  a  pre- 
viously devised  and  digested  plan.  Its  producers  have 
been  governed  by  no  fixed  rules  ;  they  have  adopted  it  as 
an  expedient  either  of  necessity  or  of  fraud  :  and  the 
extent  of  issues,  in  each  case,  has  been  governed  by 
the  joint  operation  of  the  motive  and  the  means. 

It  is  not  my  purpose  to  investigate  the  properties  of 
money  issued  thus  at  random.  But  I  desire  to  present 
the  outlines  of  a  plan  of  inconvertible  paper  money,  by 
means  of  which,  it  is  believed,  all  that  is  useful  in  coin 
and  convertible  paper  may  be  secured,  and  all  that  is  objec- 
tionable in  each  avoided,  except  so  far  as  coin  may  be 
required  in  our  external  commerce  and  in  the  circulation 
of  fractional  parts  of  a  dollar.  The  plan  I  would  sug- 
gest may  be  thus  set  forth  : 

Let  the  Constitution  of  the  United  States  be  amended, 
by  the  insertion  of  provisions  something  like  the  fol- 
lowing : 

First,  That  the  production  and  emission  of  conver- 


CHAP.    V.]       INCONVERTIBLE    PAPER    MONEY.  297 

tiblc  paper  money  in  the  United  States  be  henceforth 
interdicted,  and  that  the  amount  thereof  already  emitted 
and  now  in  use,  be  withdrawn  from  the  channels  of  cir- 
culation and  suppressed,  in  the  manner  following,  to 
wit :  by  an  annual  diminution  of  the  loans  and  discounts 
of  each  and  every  bank  in  the  Union  now  exercising  the 
functions  of  discount,  deposite,  and  circulation ;  which 
annual  diminution  shall  be  at  least  equal  to  one-tenth  of 
the  amount  by  which  their  loans  and  discounts  at  present 
exceeds  the  amount  of  their  capital  actually  paid  in  and 
not  otherwise  employed.  [This  would  leave  them  at  the 
end  of  ten  years  without  any  bills  in  circulation,  without 
any  capital  loaned  out  except  their  own,  and  with  their 
deposites,  if  any,  remaining  in  the  vaults  unemployed. 
It  would  therefore  not  only  deprive  them  of  the  power 
of  producing  money,  but  so  effectually  dry  up  their 
sources  of  profit  that  they  would  be  likely  to  disband  and 
let  each  proprietor  loan  his  own  capital.] 

Second,  That  the  existing  clause  in  the  Constitution, 
which  establishes  gold  and  silver  coins  as  the  standard 
of  value  and  as  the  legal  tender  in  payment  of  debts,  be 
so  modified  and  enlarged  as  to  include  the  money  issued 
under  and  by  authority  of  the  ensuing  clause — namely  : 

Third,  That  the  government  of  the  United  States,  in 
payment  of  its  current  expenses,  issue  annually,  for  ten 
consecutive  years,  $25,000,000  of  paper  money,  to  be 
of  the  similitude  of  bank  notes,  and  of  various  denom- 
inations, ranging  from  $1  to  $1,000  ;  and  to  be  worded 
thus  : 

" Dollars,,  legal  Money   of  the   United  States, 

issued  by   authority   of    the    people    thereof.      Dated 
Washington  city,  January  1,  18 — . 


26 


298  INCONVERTIBLE    PAPER    MONEY.          [PART  II. 

(Signed)    A.    B.,    President   of  tlie   United   States. 

"         C.  D.,  Treasurer. 
(Countersigned)  E.  F.,  Commissioner. 
"  G.  H.  Register." 

[Here  should  follow  detailed  constitutional  provisions, 
prescribing  the  method  of  production  and  emission, 
and  establishing  the  most  rigorous  of  penalties  for  every 
act  of  unfaithfulness  committed  by  those  entrusted  with 
these  operations — especially /or  the  act  of  transcending 
the  prescribed  limits  of  emission.] 

That,  at  the  expiration  of  the  ten  years,  the  popula- 
tion of  the  United  States  be  ascertained,  and  such  addi- 
tional issue  of  this  money  then  made  as  will  render 
the  aggregate  emission,  when  expressed  in  dollars,  equal 
to  ten  times  the  whole  number  of  inhabitants ;  and  that 
every  year  thereafter  the  emission  be  equal  to  ten  times 
the  annual  increase  of  population,  so  that  the  number  of 
dollars  in  paper  money  and  the  number  of  inhabitants 
will  uniformly  stand  as  10  to  1. 

Fourth,  That  the  production  and  emission  of  every 
other  substitute  for  coin  be  strictly  prohibited. 

Such  is  an  outline  of  the  monetary  policy  which  I  ven- 
ture to  recommend.  It  will  be  perceived  that  it  embraces 
the  method  of  transition  from  convertible  paper  money 
to  inconvertible,  as  well  as  the  plan  of  producing  and 
emitting  the  latter.  I  will  now  proceed  to  explain  what 
I  conceive  to  be  its  advantages. 

Paper  money,  thus  issued,  would  cost  no  thing,  or  next 
to  nothing,  to  produce,  nor  would  it  be  inconvenient 
from  weight.  Therefore,  it  would  clearly  obviate  two 
of  the  three  serious  objections  to  which  coin  is  liable. 
And  since  its  quantity,  as  compared  with  population  or 
commerce,  would  be  invariable,  it  follows  that  its  value 


CHAP.    V.]       INCONVERTIBLE    PAPER    MONEY.  299 

or  purchasing  power  would  be  uniform :  therefore,  it 
would  be  free  from  the  other  objection  which  I  have 
urged  against  coin,  and  which  applies  with  still  greater 
force  to  convertible  paper.  It  would  possess  another 
advantage  over  coin  which  deserves  notice.  When  coin 
is  lost  or  destroyed,  there  is  an  absolute  loss  of  value — 
the  owner  loses,  no  one  gains  ;  but  whenever  this  should  ; 
meet  the  same  fate,  the  loss  of  the  owner  would  be  bal- 
enced  by  the  gain  of  the  community.  If,  in  these  essen- 
tial attributes,  it  is  thus  superior  to  coin,  it  is  scarcely 
necessary  to  compare  it  with  convertible  paper,  or  with  a 
circulating  medium  made  up  of  coin  and  bank  notes.  It 
may  not  however  be  amiss  to  say,  that,  in  virtue  of  its 
irredeemable  character,  it  would  be  free  from  the  wide- 
spread mischiefs  produced  by  bank  panics,  suspensions^ 
and  failures,  which  periodically  occur  under  that  systems 
It  would  thus  greatly  mitigate  the  severity  of  commer- 
cial crises,  and  perhaps  render  them  altogether  harmless. 
In  a  word,  it  would  remedy  all  the  defects  inherent  in 
coin  and  in  convertible  paper.  The  important  inquiry 
then  is,  would  paper  issued  in  conformity  with  this  plan 
perform  the  office  of  money  1 — in  other  words,  would  it 
be  recognized  as  money,  and  received  as  money  ?  And 
if  so,  would  it  be  free  from  new  defects  peculiar  to  itself? 
I  answer  in  the  affirmative  for  the  reasons  which  follow. 
In  contemplating  money  as  an  instrument  invented  to 
fill  a  specific  office  in  the  laboratory  of  production,  we 
discovered  that  the  inventor  had  made  no  effort  to  control 
its  size,  but  left  it  to  such  development  as  the  natural 
laws  of  trade  might  happen  to  award.  And  pursuing 
our  inquiries,  we  found  that  these  laws  have  awarded  to 
that  instrument  a  very  determinate  size ; — one  which  not 
only  qualifies  it  for  measuring  and  transferring  all  other 
values  in  search  of  a  market,  but  for  measuring  them 


300  INCONVERTIBLE    PAPER    MONEY.         [PART    II. 

correctly  :  for  whenever,  from  any  cause,  it  is  either 
diminished  or  enlarged,  so  as  to  destroy  the  correctness  of 
its  measuring  power,  these  laws  speedily  bring  it  back  to 
the  standard  size  which  they  have  established.  There- 
fore the  quantity  of  money  in  circulation,  wThen  the 
instrument  is  fashioned  after  the  model  represented  by 
coin,  is  altogether  dependent  on  the  cost  of  its  produc- 
tion,— value  of  material  is  the  only  essential  element. 
Convertible  paper  money  is  constructed  on.  nearly  the 
same  principle.  In  fact,  it  is  a  part  of  the  same  instru- 
ment, since  the  paper  emissions  are  based  upon  coin  and 
purport  to  represent  it  ,  the  only  difference  being  that  a 
representative  value,  partly  fictitious,  is  there  substitu- 
ted for  a  real  one.  Consequently,  this  modification  of 
the  original  invention  has  not  interfered  with  the  princi- 
ple just  pointed  out..  The  size  or  quantity  of  a  circula- 
ting medium  compounded  of  coin  and  its  professed  repre- 
sentative, is  entirely  dependent  on  the  cost  of  producing 
coin,  and  the  aggregate  is  precisely  the  same  as  though 
it  consisted  of  coin  alone.  In  other  words,  the  quantity 
of  money,  as  that  instrument  is  at  present  constructed, 
is  governed  by  the  natural  laws  of  trade. 

Now  the  instrument  which  I  propose,  would  be  con- 
structed upon  a  principle  differing  radically  from  this. 
Its  magnitude  or  quantity ,  instead  of  being  governed 
by  natural  law,  would  be  governed  by  positive  law.  It 
will  be  readily  perceived  that  the  positive  limitation  of 
quantity  in  this  instrument  would  accomplish  the  only 
useful  purpose  that  cost  of  production  does  in  the  other ; 
and  that  it  would  do  it  not  only  as  well  but  much  bet- 
ter, provided  human  enactments  could  be  enforced  with 
as  much  certainty  as  the  laws  of  nature  are,  because  the 
cost  of  producing  coin  is  constantly  fluctuating,  and  as 
a  matter  of  course  its  value  is  equally  unsteady. 


CHAP.    V.J       INCONVERTIBLE    PAPER   MONEY.  301 

If,  then,  as  I  have  endeavored  to  show,  and  as  a  mo- 
ment's reflection  will  convince  any  one,  the  presence  of 
value  in  the  materal  of  money  be  only  required  for  the 
purpose  of  limiting  its  quantity,  how  much  better  and 
cheaper  would  it  be  to  establish  the  limitation  by  an 
unbending  organic  law  of  the  state,  and  to  select  a  ma- 
terial free  from  cost  and  inconvenience.  No  one  can 
fail  to  perceive  the  immense  advantages  that  would 
ensue.  But  it  may  be  asked,  how  would  you  secure  for 
this  improved  instrument  its  general  recognition  and 
acceptance  as  money,  when  it  neither  consists  of  nor 
represents  a  material  of  value?  It  is  believed  that  the 
plan  proposed  would  secure  that  end.  Let  us  see. 

The  substance  of  the  proposition  is  this :  That  the 
people  of  the  United  States  grant  to  their  government  an 
exclusive  patent  for  the  production  and  emission  of  paper 
money,  accompanied  by  positive  and  unbending  restric- 
tions as  to  the  quantity  it  may  emit,  and  as  to  the  legal 
value  at  which  it  shall  be  emitted  by  the  government  and 
received  by  the  people,  not  only  in  exchange  for  commo- 
dities but  in  payment  of  debts.  And  in  order  to  prevent 
any  sudden  or  even  ultimate  variation  of  the  quantity  of 
money  now  in  circulation,  I  have  proposed  that  the 
emission  correspond  in  time  and  quantity  with  the  retiring 
of  convertible  paper  money  ; — for  it  is  to  be  remarked 
that  our  banks  now  furnish,  in  the  form  of  circulating 
notes  and  deposites,  about  $250,000,000  of  convertible 
paper  money,  which  amount  agrees  with  that  of  the 
inconvertible  paper  it  is  proposed  to  issue  within  the 
time  named  for  winding  up  their  affairs ;  but  since  the 
$50,000,000  of  coin  now  held  by  them  would  be  simul- 
taneously set  free,  it  follows  that  our  circulating  medium 
would  be  increased  to  that  extent  by  the  transition ;  which 
increase,  however,  would  scarcely  equal  the  relative 
26* 


302  INCONVERTIBLE    PAPER    MONEY.         [PART    II. 

growth  of  our  commerce  during  the  same  period.  As  an 
additional,  but  perhaps  unnecessary  safeguard,  I  have 
also  proposed  that  the  production  and  emission  of  every 
other  sort  of  money,  save  gold  and  silver,  of  which  there 
need  be  no  fears  of  a  redundancy,  be  stricly  prohibited. 

The  name  (Money)  and  the  legal  character  that  would 
be  thus  stamped  upon  this  paper  by  the  supreme  law, 
combined  with  the  promised  recognition  implied  in  grant- 
ing authority  to  issue  it,  could  not  fail  to  secure  its  gen- 
eral recognition  and  acceptance  as  money  everywhere 
within  our  borders,  especially  as  the  want  of  some  other 
medium,  to  take  the  place  of  bank  notes  withdrawn  from 
circulation,  would  be  intense,  while  this  would  be  the 
only  legal  substitute  attainable.  Under  circumstances 
like  these,  the  result  could  not  be  doubtful :  the  paper 
would  be  not  only  recognized  as  money,  but  cordially 
received  in  that  capacity.  And  it  would  be  equally  cer- 
tain to  do  its  work  well.  The  impossibility  of  obtaining 
it  without  giving  in  exchange  an  amount  of  real  value 
equal  to  the  unchanging  legal  value  wherewith  it  is 
stamped,  combined  with  the  invariableness  of  its  quan- 
tity, would  render  its  measurements  of  value  both  true 
and  uniform.  Its  lightness  and  adaptation  to  rapid 
counting  would  render  it  convenient  as  an  instrument  of 
transfer,  which  fact  is  fully  established  by  experience 
derived  from  the  use  of  its  prototype,  bank  notes. 

Now  if  this  kind  of  money  is  producible  without  cost ; 
if  it  will  be  recognized  and  received  as  money ;  if  it  will 
measure  values  with  uniform  correctness,  and  transfer 
them  without  inconvenience — why  is  it  not  perfect?  It 
would  seem  to  combine  all  the  good  qualities  we  could 
desire,  and  to  be  free  from  bad  ones,  unless  they  have 
been  overlooked.  Perhaps  it  may  be  urged  in  objection 
to  the  plan,  that  its  adoption  would  invest  government 


CHAP.  V.]       INCONVERTIBLE    PAPER    MQNEY.  303 

with  a  monopoly.  If  so,  it  may  be  answered  that  the 
right  to  produce  and  establish  the  standard  of  value  is  a 
legitimate  and  useful  prerogative  of  government, — a 
prerogative  conferred  on  ours  at  its  birth,  and  which 
it  has  uniformly  exercised,,  albeit  imperfectly,  by  coin- 
ing gold  and  silver  money  and  regulating  the  value 
thereof.  In  truth,  the  functions  of  money  are  so  inter- 
woven with  the  affairs  of  men  that  its  stability  and  uni- 
formity of  value  are  almost  as  essential  to  their  pros- 
perity as  is  the  establishment  and  maintenance  of  the 
right  of  property  itself.  And  since  we  have  seen  that 
the  production  of  convertible  paper  money  is  demoralizing 
and  unprofitable  to  those  engaged  in  that  pursuit,  it  follows 
that  the  unqualified  government  monopoly  herein  propo- 
sed, and  whieh  it  is  believed  the  framers  of  our  consti- 
tution intended  to  confer,  would,  like  the  maintenance  of 
the  right  of  property,  deprive  the  citizen  of  no  privilege 
but  that  of  plundering  his  fellow  men  without  advantage 
to  himself.  It  is  proper  to  remark,  also,  that  where  the 
form  of  government  is  republican,  the  profits  and  other 
advantages  resulting  from  the  monopolies  wherewith  it 
is  invested,  inure  to  the  people  themselves,  and  are 
shared  by  all. 

But  a  more  plausible  objection  to  my  plan  may  be 
grounded  on  the  conceded  fact  that  the  paper  issued  in 
conformity  with  it  would  not  be  recognized  as  money  in 
foreign  countries ;  and  hence,  that  it  would  be  defective 
as  an  instrument  of  external  commerce.  However  valid 
this  objection  may  be,  when  urged  against  the  adoption 
of  a  circulating  medium  of  inconvertible  paper  alone,  it 
is  altogether  inapplicable  to  my  scheme,  as  will  be  shown 
presently.  It  is  believed,  however,  that  it  would  not  be 
entitled  to  much  if  any  weight  when  applied  to  the 
stronger  case  just  referred  to.  In  the  ordinary  transac- 


304  INCONVERTIBLE    PAPER    MONEY.         [PART    II. 

tions  of  international  commerce,  bills  of  exchange  are 
employed  instead  of  money,  the  latter  being  only  re- 
quired for  preserving  the  equilibrium,  which  it  does  by 
passing  from  the  debtor  to  the  creditor  community  when- 
ever an  adverse  balance  occurs.  Now  it  is  obvious  that 
bullion  would  perform  this  service  quite  as  well  as  money, 
for,  like  that,  it  is  of  uniform  value  everywhere.  True, 
the  exportation  of  bullion  would  not  check  importations 
so  promptly  as  does  the  exportation  of  coin,  because  the 
latter  acts  directly  on  their  market  price,  while  the  for- 
mer could  only  affect  the  market  price  of  bullion ;  but 
since  by  elevating  that,  the  cost  of  imports  and  the  mar- 
ket value  of  exports  would  be  increased,  it  is  clear  that 
the  ultimate  consequence  would  be  the  same  in  both 
cases,  namely,  a  check  to  imports  and  an  impetus  to 
exports.  For  these  reasons,  it  is  believed  that  money 
in  the  form  of  coin  is  not  essential  even  in  foreign  com- 
merce ;  and  hence  that  coin  and  all  other  money  based 
on  the  value  of  its  material,  might  be,  with  safety  and 
profit,  entirely  displaced  by  inconvertible  paper,  with  the 
exception,  perhaps,  of  fractional  parts  of  a  dollar.  The 
soundness  of  this  conclusion  is  in  some  measure  confirmed 
by  the  experience  of  Buenos  Ayres.  The  commerce  of 
that  state  has  been  carried  on  for  many  years  with  no 
other  money  than  inconvertible  paper.  They  have  not 
issued  it  in  conformity  with  any  established  plan ;  they 
have  issued  twelve  times  the  quantity  called  for  by  their 
commerce ;  they  increase  the  emission  whenever  the 
wants  of  government  are  pressing  ;  the  government  itself 
is  so  weak  as  to  be  liable  to  foreign  subjugation,  in  which 
case  the  purchasing  power  of  its  money  would  be  des- 
troyed. Yet,  in  the  face  of  these  serious  defects,  their 
paper  money  performs  its  office  not  only  to  their  own 
satisfaction,  but  to  the  satisfaction  of  those  of  other 


CHAP.    V.]       INCONVERTIBLE    PAPER    MONEY.  305 

countries  who   are  connected  with  their  external  com- 
merce. 

There  are,  however,  some  objections  to  the  entire 
disuse  of  the  precious  metals  as  money  ;  but  it  is  unnes- 
sary  to  name  them,  since  they,  taken  in  connexion  with 
the  possible  validity  of  the  objection  just  disposed  of, 
have  deterred  me  from  proposing  that  policy.  My  pro- 
position is  merely  designed  to  transform  that  portion  of 
our  circulating  medium  which  consists  of  convertible  pa- 
per, into  inconvertible — or  rather,  to  expel  the  one  and 
fill  its  place  with  the  other — leaving  the  coin  portion  un- 
disturbed. We  should  thus  blend  the  service  of  the  two 
portions,  and  secure  the  utility  of  both  inventions.  The 
paper  would  circulate  at  home,  coin  partly  at  home  and 
partly  in  the  channels  of  foreign  commerce.  It  may  be 
useful  to  illustrate  this  point  briefly. 

It  has  been  shown  from  well  authenticated  statistics 
that,  at  the  present  cost  of  producing  coin,  our  aggregate 
of  money,  when  expressed  in  dollars,  is  equal  to  15  times 
the  number  of  our  inhabitants.  But  this  sum  is  known 
to  be  subject  to  variations  connected  with  foreign  com- 
merce. For  example,  when  the  exports  exceed  the  im- 
ports money  flows  in ;  when  the  imports  are  in  excess  it 
flows  out.  And  as  it  respects  the  United  States,  it  must 
be  remarked  that  when  the  balance  of  trade  is  favora- 
ble and  coin  flowing  in,  our  banks  increase  their  issues, 
when  the  balance  is  adverse  and  the  coin  leaving  us, 
they  contract  them ;  which  influences  necessarily  increase 
the  extent  of  these  variations.  The  data  furnished  by 
the  records  of  our  foreign  commerce  show  that  the  excess 
of  exports  of  coin  over  its  imports,  or  of  imports  over 
exports,  in  any  single  vibration  of  the  balance  of  trade, 
never  exceeds  $25,000,000 — rarely  half  that  sum.  . 
The  statistics  of  banking  show  that  their  expansions  and 


306  INCONVERTIBLE    PAPER    MONEY.         [PART    II. 

contractions  occupy  much  wider  limits.  In  the  memor- 
able inflasion  of  1836,  which  stimulated  to  madness  the 
gambling  propensities  of  our  people,  and  in  the  subse- 
quent contraction,  ending  in  1841,  which  bankrupted  not 
only  individuals  but  states,  and  engendered  immoral 
practices  so  gross  that  they  have  cast  a  shade  over  that 
chapter  of  our 'history — the  two  extremes  were  $155,- 
000,000  apart.  With  the  exception  of  this  instance,  it 
is  believed  that  the  oscillations  of  our  convertible  paper 
money  have  not  transcended  the  limits  of  $75,000,000; 
which,  added  to  the  variations  in  coin,  gives  as  the  aggre- 
gate variation  in  our4  quantity  of  money  $100,000,000, 
or  $5  per  head.  In  other  words,  our  circulating  medium, 
as  at  present  compounded  of  coin  and  its  professed  repre- 
sentative, ranges  from  $12^  to  1  of  population,  up 
to  17^  to  1.  Convertible  paper  money  is  peculiarly 
liable  to  variations  in  quantity,  because  it  purports 
to  represent  more  coin  than  it  really  does,  in  *  conse- 
quence of  which  it  is  compelled  to  contract  its  vol- 
ume whenever  a  panic  or  a  foreign  demand  for  coin 
sends  it  in  for  redemption.  It  is  apparent,  therefore, 
that  with  a  circulating  medium  exclusively  metalic,  or 
mixed  in  the  manner  I  have  proposed,  these  vibrations  in 
our  quantity  of  money  would  be  confined  within  much 
narrower  limits — limits  which  we  may  safely  say  could 
never  exceed  $60,000,000.  This  would  give  as  our 
minimum  13|  to  1.  $30,000,000,  or  $1|  to  1  of  popu- 
lation, would  be  abundant  to  fill  the  channels  of  circula- 
tion with  fractional  parts  of  a  dollar.  Taking  the  last 
named  sum  from  the  minimum,  it  leaves  $12  to  1  of 
population,  as  the  largest  extent  to  which  irredeemable 
paper  could  be  issued  without  resorting  to  bullion  to  aid 
in  liquidating  the  adverse  balances  of  foreign  commerce. 
My  proposition  is  but  10  to  1 ;  consequently  it  would 
not  render  that  expedient  necessary. 


CHAP.    V.]       INCONVERTIBLE    PAPER    MONEY.  307 

If  our  money  were  constructed  according  to  the  plan 
suggested,  it  would  consist  of  two-thirds  paper  and  one- 
third  coin.  At  home  they  would  work  in  harmony  and 
concert  in  measuring  and  transferring  values,  and  in  satis- 
fying contracts,  with  this  difference  only  :  the  paper  being 
the  lighter  and  more  convenient  of  the  two — it  being  capa- 
ble of  travelling  faster  and  at  less  expense  than  coin — it 
would  necessarily  receive  a  preference  over  it,  ranging 
from  one-quarter  of  one  per  cent,  to  two  per  cent.,  accord- 
ing to  circumstances  and  locality.  But  when  an  adverse 
balance  of  trade  opened  the  door  to  a  foreign  demand  for 
money,  coin  alone  could  satisfy  that  demand,  which 
would  give  it,  momentarily,  a  higher  market  value  than 
its  paper  colleague.  That  the  difference,  however,  would 
be  both  slight  and  temporary,  is  made  manifest  by  the 
teachings  of  1837.  Our  currency  had  then  been  inflated 
beyond  all  precedent ;  the  inflation  had  engendered  spec- 
ulations, foreign  loans  and  importations  to  an  untold 
amount ;  and  when  the  re-action  came,  the  banks  suspen- 
ded cash  payments  at  almost  the  first  call  for  coin,  leaving 
the  country  flooded  with  an  inconvertible  paper  currency, 
and  with  a  large  balance  of  foreign  indebtedness.  Under 
this  accumulation  of  adverse  circumstances,  the  paper 
of  the  suspended  banks  in  New  York — the  point  at  which 
the  foreign  demand  for  coin  was  strongest — did  not  sink 
more  than  12  per  cent,  below  coin,  and  it  recovered  at 
least  the  half  of  this  depression  as  soon  as  the  panic 
caused  by  the  explosion  had  subsided.  The  twenty-six 
years  suspension  of  cash  payments  by  the  Bank  of  Eng- 
land, furnishes  another  notable  illustration  in  point. 
During  the  greater  part  of  the  period  of  suspension,  the 
bills  of  that  bank  were  almost  upon  a  par  with  coin ; 
and  their  value  was  never  seriously  depressed,  except  in 
the  more  trying  crises  of  the  wars  against  Napoleon.  It 


308  INCONVERTIBLE    PAPER    MONEY.          [PART    II. 

must  be  borne  in  mind  that  the  depressions  here  referred 
to  were  mainly  produced  by  causes  from  which  the  money 
I  have  proposed  would  be  entirely  exempt.  It  is  well 
known,  for  instance,  that  the  bills  of  suspended  banks 
are  depressed  in  value  by  the  non-fulfilment  of  the  prom- 
ise stamped  upon  them,  by  their  excessive  emission,  by 
a  knowledge  of  their  utter  worthlessness  in  case  the  sus- 
pension proves  to  be*a  failure,  as  it  often  dees,  and  in 
most  cases  by  their  want  of  legality,  as  well  as  by  the 
absence  of  their  foreign  recognition  as  money ;  which 
last  is  the  only  cause  of  depression  that  would  apply  to 
inconvertible  paper  money  issued  in  accordance  with  the 
plan  suggested.  It  is  believed,  therefore,  that  the 
strongest  foreign  demand  for  coin  could  not  enhance  its 
market  value,  even  temporarily,  more  than  two  or  three 
per  cent.,  or  at  the  utmost  four  per  cent.,  above  that  of 
its  paper  colleague.  Arid  we  must  not  overlook  the  im- 
portant fact  that  this  temporary  superiority  of  coin  would 
be  caused  by  the  expansion  of  its  own  market  value,  not 
by  a  contraction  of  that  of  the  paper  money :  the  mar- 
ket value  of  the  coin  would  change,  that  of  the  paper 
would  remain  as  before,  or  rather,  its  purchasing  power 
would  also  increase,  but  in  a  less  degree  than  that  of  the 
coin. 

Upon  the  whole,  I  think  we  may  safely  conclude  that 
the  average  market  value  of  the  paper  dollar  would  be 
higher  than  that  of  its  metallic  compeer.  The  sound- 
ness of  this  conclusion  can  be  tested  only  by  experi- 
ment ;  but  I  have  such  entire  confidence  in  the  truth  of 
the  theory  whence  it  is  derived,  that  I  have  no  more 
doubt  that  a  fairly  made  experiment  would  verify  it  than 
I  have  that  the  sun  will  rise  to-morrow. 

It  remains  to  notice  one  other  objection  that  may  be 
urged  against  this  plan  of  money,  and  it  is  the  only  one 


CHAP  V.J          INCONVERTIBLE    PAPER    MONEY.  309 

of  any  validity  to  which  it  is  fairly  liable.  I  refer  to 
the  difficulty  of  confining  the  total  emission  within  the 
limits  prescribed,  and  of  guarding  against  other  acts  of 
unfaithfulness  on  the  part  of  those  entrusted  with  its 
production  and  emission, — a  difficulty  which  has  its  origin 
in  the  frailty  of  humun  nature.  There  can  be  little 
doubt,  however,  of  the  feasibility  of  securing  these  ends. 
Mature  reflection  would  suggest  a  plan  of  guards,  and 
checks,  and  punishments,  abundantly  competent  not  only 
to  secure  the  faithful  execution  of  the  trust,  but  to  guard 
this  money,  more  effectually  than  any  hitherto  produced, 
from  successful  attempts  to  counterfeit  it.  The  simple 
expedient  of  connecting  the  President  of  the  United 
States  with  the  trust  and  making  him  responsible  for  its 
faithful  performance,  would  probably  be  sufficient  of 
itself  to  prevent  unfaithfulness ;  for  we  have  never  yet 
had,  and  it  is  hoped  we  never  may  have,  an  incumbent  of 
that  office  whose  desire  of  fame,  sense  of  duty,  and  love 
of  virtue,  combined  with  the  fear  of  punishment,  have 
not  been  sufficient  to  restrain  him  from  the  perpetration 
of  fraud  and  perjury  for  the  sake  of  pecuniary  gain, 
however  great.  But  it  would  not  be  right,  nor  prudent,  to 
put  the  fidelity  of  the  President  to  so  severe  a  test  as  the 
sole  trusteeship  would  involve.  The  trust  should  be 
placed  in  the  hands  of  the  President,  the  Vice  President, 
and  the  Treasurer  of  the  United  States,  together  with  a 
Commissioner  and  a  Register  to  be  elected  by  the  people. 
Each  of  these  trustees  should  not  only  sign  and  preserve 
a  record  of  every  bill  issued,  but  they  should  be  enjoined 
to  fidelity  by  an  oath,  and  deterred  from  infidelity  by  the 
most  severe  and  ignominious  penalties  known  to  our  laws. 
And  if  it  should  be  deemed  necessary  to  guard  against 
collusion  on  the  part  of  the  trustees,  it  might  be  required 
that  every  bill  issued  should  be  registered  and  counter- 
27 


310  INCONVERTIBLE    PAPER    MONEY.         [PART    II. 

signed  by  one  or  more  of  the  governors  of  states.  These 
suggestions  are  thrown  out  as  an  indication  of  the  means 
at  our  command  for  preventing  excessive  issues  and  other 
frauds,  not  as  the  proper  method  of  attaining  that  end. 
Doubtless  those  who  are  skilled  in  such  matters  could 
frame  provisions  far  more  appropriate  and  effectual . 

In  conclusion  it  may  be  observed  that,  by  the  adoption 
of  this  plan  of  producing  money  and  regulating  the  value 
thereof,  the  people  of  the  United  States  would  save,  in 
diminished  taxes,  within  the  first  ten  years,  $250,000,000, 
and  some  $7,000,000  (or  tenfold  the  increase  of  popula- 
tion) annually  thereafter,  together  with  the  interest  of 
the  whole  and  the  principal  of  whatever  portion  of  the 
emission  should  happen  to  be  lost  or  destroyed.  They 
would,  moreover,  enjoy  the  convenience  of  paper  money 
without  subjecting  themselves  to  the  manifold  evils  of 
bank  notes ;  and  they  would  possess  a  better,  a  more  uni- 
formly truthful  measure  of  value,  than  coin,  without  its 
accompaniments  of  cost  and  weight.  It  will  be  readily 
admitted  that  these  are  advantages  worth  possessing ; 
and,  after  mature  reflection,  I  am  free  to  declare  my 
conviction  that  they  may  be  secured  by  the  plan  of 
which  I  have  given  the  outlines,  and  without  the  hazard 
of  a  single  returning  evil. 


311 


CHAPTER  vi. 

OF  CREDIT ;  AND  OF  THE  RIGHT  OF 
PROPERTY  IN  ACTIONS. 


It  is  known  that  great  inequality  exists  in  the  pecu- 
niary condition  of  mankind,  and  that  the  fact  is  chiefly 
attributable  to  the  various  degrees  of  skill,  diligence  and 
frugality  wherewith  nature  has  endowed  different  indi- 
viduals, though  it  must  be  owned  that  unjust  laws  often 
produce  no  small  share  of  the  inequality.  In  a  former 
chapter  it  has  been  shown  that  this  inequality  in  the 
ownership  of  wealth,  by  placing  a  superabundance  of 
capital  and  land  in  the  hands  of  some  proprietors  of 
industry,  and  a  deficiency  in  the  hands  of  others,  led  to 
the  expedient  of  Credit,  which,  for  purposes  of  produc- 
tion, equalized  their  distribution,  and  thus  avoided  the 
necessity  of  any  portion  of  the  productive  forces  remain- 
ing idle.  It  was  there  shown,  also,  that  the  right  of 
property  in  actions  was  instituted  by  governments  for 
the  purpose  of  compelling  the  return  of  capital  and  land 
thus  loaned.  I  then  expressed  some  doubts  as  to  the 
wisdom  of  that  policy,  and  will  now  present  the  reasons 
on  which  those  doubts  are  grounded — premising,  how- 
ever, that  further  reflection  on  the  subject  has  resolved 
them  into  convictions. 

The  establishment  of  this  right  is  the  most  complex 
feature  of  government,  and  its  enforcement  by  far  the 


312  CREDIT.  [PART  n. 

most  difficult  duty  that  the  state  has  undertaken  to  per- 
form. Take  it  all  in  all,  it  has  caused  a  prodigious 
enlargement  of  the  government  machine.  A  vast  ma- 
jority of  the  laws  of  every  civilized  nation  are  designed 
either  to  define,  establish,  enforce,  or  perfect  this  right ; 
and  the  chief  duty  of  the  judiciary  is  to  adjudicate,  and 
of  the  bar  to  prosecute,  the  claims  and  legal  controver- 
sies to  which  it  gives  rise.  Yet  how  very  imperfectly  is 
it  enforced !  We  frequently  see  debtors  revelling  in 
wealth,  which  belongs  to  their  creditors — creditors  who 
have  tried  the  remedies  provided  by  government  for  se- 
curing their  rights,  and  found  them  utterly  unavailing. 
In  truth,  it  is  very  rare — so  rare  that  it  may  be  called 
an  exception  to  the  general  rule — that  any  one  who  is 
indisposed  to  pay  his  debts  is  compelled  to  do  so  by 
virtue  of  legal  remedies,  however  able  he  may  be. 
Therefore  the  right  of  property  in  actions,  or — to  use  a 
more  familiar  phrase — the  enforcement  of  the  obligation 
of  contracts,  is  not,  practically,  a  reality.  It  is  an  illu- 
sion, or  rather,  a  rotten  beam  in  the  political  edifice, 
tempting  the  dependence  of  the  unwary,  but  failing  to 
give  them  the  needful  support  at  the  critical  moment. 

Now  it  is  manifest  that  there  must  be  some  fundamen- 
tal error  in  this  policy.  A  right  whereof  the  establish- 
ment, definition  and  maintenance,  consumes  more  than 
one  half  the  mental  service  devoted  to  legislation ;  a 
right  which  forms  the  staple  of  law-books,  and  the 
attempted  enforcement  of  which  constitutes  the  chief 
duty  of  judges,  lawyers,  jurors,  witnesses,  and  a  host  of 
government  officials,  should  be  something  more  than  a 
mere  nullity.  One  of  two  things,  therefore,  is  clearly 
necessary  :  the  right  should  be  either  strengthened  and 
made  real  by  more  perfect  guaranties,  or  it  should  be 
annulled.  Which  is  the  proper  remedy  ?  Experience 


CHAP.    VI.]  CREDIT.  313 

has  demonstrated  the  impossibility  of  perfecting  the 
right,  especially  its  enforcement ;  but  assuming  it  fea- 
sible to  increase  in  an  essential  degree  its  security, 
which  may  well  be  doubted,  it  is  believed  that  it  would 
be  better  policy,  nevertheless,  to  abrogate  it  altogether 
as  relates  to  capital,  but  not  as  relates  to  land. 

It  has  been  shown  that  wealth  is  produced  by  the 
joint  effort  of  skill,  labor,  capital  and  land,  and  that  in 
every  concurrent  group  the  different  agents  correspond 
in  magnitude ;  that  is,  there  is  sufficient  of  each  to  con 
cur  with  the  productive  powers  of  the  others.  When 
the  proprietor  of  industry  owns  less  of  capital  and  land 
than  he  is  capable  of  laboring  in  concert  with,  he  either 
borrows  more  of  these  or  he  loans  his  industry  to  others  ; 
when  his  capital  and  land  are  in  excess,  he  either  loans 
the  excess  or  he  borrows  more  industry.  By  these  means 
the  productive  forces  are  so  distributed  that  the  whole  of 
each  is  fully  employed.  These  are  the  simplest  forms  of 
credit.  In  these  forms,  and  to  the  extent  indicated,  it  is 
highly  advantageous  to  borrowers  and  to  lenders,  and  for 
that  reason  would  exist  in  the  absence  of  the  pretended 
guaranty.  But  there  are  other  and  more  complicated 
forms  of  credit,  which  doubtless  originated  in  govern- 
mental interference.  I  refer  particularly  to  the  existing 
system  of  mercantile  credits,  especially  in  the  United 
States,  where  it  is  carried  to  a  more  pernicious  extent 
than  it  is  in  any  other  country.  Under  this  system  B 
borrows  capital  in  the  form  of  merchandize  of  A,  not 
for  the  purpose  of  employing  the  capital  himself,  but  for 
the  purpose  of  loaning  it  to  C,  who  in  his  turn  loans  it 
to  D,  and  so  on  to  the  end  of  the  alphabet — each  charging 
a  profit  (beyond  a  fair  commission  for* the  sale  of  goods,) 
sufficient  to  cover  interest  and  risk  of  loss  on  the  amount 
loaned.  A  large  share  of  the  internal  commerce*  of  our 

27* 


314  CREDIT.  [PART  n. 

country  is  carried  on  under  this  system  ;  and  instead  of 
being  beneficial,  it  appears  to  me  to  be  seriously  detri- 
mental to  both  prosperity  and  virtue. 

It  is  known  that  2£  per  cent,  commission  is  charged 
for  guaranteeing  sales  on  credit  in  those  departments  of 
commerce  where  the  hazards  on  such  sales  are  least.  It 
is  also  known  that  in  some  branches  of  business,  and  in 
the  retail  trade  generally,  the  per  centage  of  loss  on 
credit  sales  ranges  from  10  per  cent,  upwards.  We 
may  therefore  safely  assume  that  the  mean  loss  on  credit 
sales  is  not  less  than  4  per  cent.  In  passing  from  pro- 
ducers to  consumers,  commodities  are  usually  subject  to 
numerous  sales  or  transfers  of  ownership.  Take,  for  an 
illustration,  the  article  cotton.  It  first  passes  from  its- 
producer  to  the  commission  merchant,  thence  tathe  manu- 
facturer, thence  again  to  the  commission  merchant, 
thence  to  the  jobber,  thence  to  the  retailer,  and  thence, 
finally,  to  the  consumer.  This  is  its  most  direct  route. 
It  sometimes  has  to  pass  through  the  hands  of  several 
other  intermediate  agents.  The  same  remarks  will 
apply  to  most  other  agricultural  products,  and,  indeed, 
with  slight  modifications,  to  every  article  that  passes 
through  the  channels  of  commerce. 

We  shall  be  safe  then  in  assuming  that  the  average 
number  of  sales  to  which  the  articles  of  commerce  are 
subjected,  before  reaching  consumers,  is  not  less  than 
five.  And  we  have  just  seen  that  the  average  profit 
charged  on  each  credit  sale,  to  cover  risk  of  loss,  is  four 
per  cent,  or  upwards  ;  so  that  consumers  have  to  pay,  in 
addition  to  interest  for  the  credit  extended  to  them- 
selves, not  less  than  20  per  cent,  more  for  goods  which 
have  been  transferred  through  the  different  agencies  of 
commerce  by  means  of  credit,  than  they  do  for  those  that 
are  transferred  by  means  of  cash  payments.  This  is  one 


CHAP.    VI. J  CREDIT.  315 

of  the  legitimate  fruits  of  the  existing  system  of  com- 
mercial credits.  It  will  be  admitted  that  it  is  bitter  ; 
but  I  will  proceed  to  show  that  the  system  bears  another 
class  of  fruits  which  are  still  more  pernicious. 

Is  it  asked  what  becomes  of  the  20  per  cent,  addi- 
tional profits  paid  by  consumers  ?  It  is  obvious  that  it 
does  not  go  into  the  pockets  of  merchants,  as  extra  pro- 
fits, for  we  have  seen  that  it  merely  remunerates  them 
for  losses  on  credit  sales.  It  goes  then  to  those  mer- 
chants who  do  not  pay  for  the  goods  they  buy  on  credit, 
and  to  those  consumers  who  do  not  pay  for  the  articles 
which  they  consume.  Does  it  benefit  either  of  these 
classes  ?  Clearly  not  in  a  pecuniary  point  of  view,  for  it 
leaves  them  poor ;  their  only  plea  for  not  paying  is  inabil- 
ity, and  incase  the  plea  is  not  well  founded  the  law  profes- 
ses to  enforce  payment.  Does  it  tend  to  elevate  them  in  a 
social  or  moral  point  of  view,  or  to  increase  their  happi- 
ness in  any  respect  ?  Directly  the  contrary.  It  enables 
them  to  sow  the  seeds  of  idleness,  dissipation,  improvi- 
dence and  other  vicious  habits,  and  to  reap  the  harvest 
of  misery,  which,  in  some  form  or  other,  invariably  en- 
sues. In  short,  this  form  of  the  credit  system  compels 
the  honest,  industrious  and  frugal  to  pay  one-fifth  higher 
for  the  goods  they  consume,  in  order  that  spendthrifts  and 
rogues  may  live  in  idleness  and  luxury. 

It  is  generally  supposed,  however,  that  credit  multi- 
plies capital,  and  hence  that  without  this  extended  sys- 
tem of  credits  there  would  not  be  sufficient  means  to 
prosecute  commerce  advantageously,  if  at  all.  This  is 
an  error.  The  premises  are  altogether  false.  Credits  of 
the  simplest  kind  merely  shift,  for  a  stipulated  period, 
the  possession  of  capital,  without  either  increasing  or 
diminishing  its  amount.  But  the  complicated  system  of 
mercantile  credits  which  now  prevails,  scarcely  does  so 


316  CREDIT.  [PART    II. 

much  as  that — at  least,  while,  like  the  simpler  forms  of 
credit,  it  utterly  fails  to  increase  capital,  it  does  not  even 
shift  its  possession  to  anything  like  the  extent  of  the 
credits  granted  :  for  in  many  instances,  a  line  of  indebt- 
edness, running  the  whole  length  of  the  alphabet,  might 
be  liquidated  by  a  single  transfer  of  property  from  Z  to 
A.  Indeed,  it  often  happens  that  Z  and  A  are  also  con- 
nected by  a  similar  credit,  so  that  the  line  of  indebted- 
ness forms  a  complete  circle,  in  which  case  there  is  no 
transfer  of  capital,  provided  the  debits  and  credits  in  each 
link  of  the  series  are  equal  and  uniform ;  since,  in  that 
event,  the  whole  indebtedness  may  be  liquidated  by  off- 
sets, without  a  single  payment  in  cash,  or  other  transfer 
of  property.  The  more  general  case,  however,  is  the 
one  first  named.  The  operation  is  something  like  this  : 
merchants  of  the  first  class,  such  as  importing  and  com- 
mission houses,  usually  advance  either  cash  or  accep- 
tances at  short  date  for  their  wares  ;  they  sell  them  to 
the  jobbing  merchant  on  a  credit  of  six  or  eight 
months ;  the  jobber  sells  them  to  the  retailer,  and  the 
retailer  distributes  them  to  consumers,  on  similar  terms. 
As  a  means  of  payment,  the  consumers  rely  either  on  the 
debts  due  them  for  their  own  products  which  they  had 
previously  sold  on  credit,  or  on  their  future  earnings — 
generally  the  latter. 

Now  it  is  evident  that,  where  consumers  rely  on  the 
debts  due  them  for  liquidating  their  own  indebtedness, 
this  system  of  credits  does  not  alter  the  distribution 
of  capital,  nor  the  pecuniary  condition  of  any  one  of 
those  who  participate  in  it,  otherwise  than  by  compel- 
ling them  all  to  pay  20  per  cent,  higher  for  the 
products  which  they  consume.  But  where  consumers 
rely  on  their  future  earnings  to  pay  for  goods  which 
they  have  bought  on  credit  and  consumed,  the  effects 


CHAP.  VI.]  CREDIT.  317 

of  the  system  are  different.  It  does  not  then  augment 
capital,  nor  in  any  wise  increase  the  facilities  of  produc- 
tion or  the  interchange  of  commodities ;  but  it  is  vir- 
tually a  loan,  at  an  enormous  profit,  from  the  mercan- 
tile to  the  agricultural,  manufacturing,  and  mechanic 
classes,  of  an  amount  of  capital  which,  but  for  the  sys- 
tem, the  latter  would  save  out  of  their  own  earnings — 
save,  too,  without  stinting  their  consumptions,  for  we  have 
seen  that  they  would  then  obtain  their  supplies  20  per 
cent,  cheaper  than  they  do  at  present.  It  therefore 
tends  to  impoverish  all  classes  but  the  mercantile,  and 
to  demoralize  that  without  enriching  it,  since,  as  already 
shown,  the  extra  profits  charged  by  merchants  merely 
compensate  them  for  their  losses  by  bad  debts. 

For  these  and  other  reasons  which  might  be  advanced, 
I  regard  our  present  extended  credits  as  going  far  be- 
yond the  boundaries  of  utility  ;  nor  can  it  be  doubted, 
I  fancy,  that  they  owe  their  extraordinary  development 
to  the  interference  of  government.  The  abrogation  of  all 
laws  for  the  collection  of  debts  would  speedily  lop  off 
the  excresencies  of  the  system,  and  bring  credit  back 
to  the  performance  of  that  office  which  it  was  originally 
designed  to  fill — namely,  to  equalizing,  for  the  pur- 
poses of  production,  the  distribution  of  the  productive 
forces. 

It  may  be  supposed  by  some,  that  without  the  stimulus 
of  law,  credits  could  not,  or  would  not,  be  kept  up  to  the 
extreme  limits  of  utility.  I  am  entirely  satisfied  that 
there  need  be  no  fears  on  this  point.  The  interests  of 
the  rich  and  the  poor,  of  borrowers  and  lenders,  are  reci- 
procal as  respects  credits.  The  former  are  as  unwilling 
to  lose  the  revenue  of  their  surplus  capital  and  land,  by 
reason  of  their  idleness,  as  the  poor  are  unable  to  forego 
the  revenue  of  their  industry  ;  so  that  the  inducements 


318  CREDIT.  [PART  n. 

offered  on  either  side  could  not  fail  to  be  such  as  to  bring 
the  two  together,  to  at  least  the  degree  requisite  to  pre- 
vent the  idleness  of  either.  The  chances  are,  on  the 
contrary,  that  the  adventurous  spirit  of  the  mercantile 
class,  aided  bj  the  force  of  habit,  would  perpetuate  an 
excessive  development  of  credit,  at  least  for  a  long  time 
after  the  legal  stimulus  had  been  removed. 

Under  the  existing  system,  lenders  look  chiefly  to  the 
responsibility  of  the  borrower,  i.  e.  to  his  pecuniary 
means  of  paying.  Abolish  the  right  of  property  in 
actions,  and  they  will  look  exclusively  to  character — to 
honesty,  capability,  and  other  kindred  attributes.  These 
are  the  legitimate  foundations  of  credit,  for  it  is  mainly 
the  poor — they  who  have  no  other  security  to  offer — that 
wish  to  avail  themselves  of  the  benefits  to  be  derived 
from  borrowing.  It  is  a  well  known  law  of  commerce — 
and  the  principle  will  hold  good  in  every  other  class  of 
transactions — that,  whenever  you  increase  the  demand  for 
an  article,  the  supply  directly  increases  in  the  same 
ratio.  Increase  the  demand  for  integrity  of  character, 
frugality  and  diligence,  by  basing  credits  exclusively 
upon  them,  and  you  will  soon  stimulate  and  de- 
velope  these  desirable  qualities  of  character  to  such  a 
degree  that  any  one  wfao  should  prove  so  far  deficient 
therein  as  to  refuse  the  payment  of  a  debt,  when  he  either 
possessed  or  by  proper  efforts  might  have  possessed  the 
means  of  payment,  would  be  utterly  discountenanced  in 
all  respectable  society.  Increase  the  demand  for  virtue 
and  you  will  increase  the  supply  ;  enlarge  its  rewards, 
and  you  will  not  fail  to  improve  its  quality,  and  thereby 
elevate  the  national  standard  of  morality. 

As  the  matter  now  stands  there  are  districts  in  our 
country  in  which  it  is  accounted  meritorious  to  evade  the 
payment  of  an  honest  debt ;  while  in  no  part  of  our 


CHAP.    VI.]  CREDIT.  319 

country  is  that  species  of  villiany  so  emphatically  con- 
demned as  to  be  made  a  ground  of  exclusion  from  any 
social  circle,  however  select  or  exacting  it  may  be  in  other 
respects.     This   vicious   public   sentiment  is  a  natural 
consequence  of  the  existing  policy.     Creditors  look  more 
to  the  law  than  to  the  honesty  or  honor  of  their  debtors 
for  the   enforcement  of  payments  ;  and  while  such  is 
the  case  we  must  expect  that  evasions  of  payment  will 
be  regarded  as  skilful  achievements  over  the  law  and 
the  sagacity  of  creditors,  rather  than  as  acts  of  dishonor. 
Or,  if  these  offences  against  morality  are  not  looked  upon 
with   entire  complacency,  the  existing  policy  at  least  se- 
cures them  from  a  large  share  of  that  obloquy  which  would 
justly  attach  to  them   if  the   debtor's   seriSe   of  justice 
were  the  only  means  relied  on  for  enforcing  payments.* 
Another  consideration  deserves  notice.     The  compul- 
sory enforcement  of  the  payment  of  debts  gives  a  facti- 
tious advantage  to  capital,  by   securing  to  its  owners  a 
larger  degree  of  credit  than  they  could  otherwise  obtain, 
which  is  a  clear  infringement  of  the  rule  of  equality.  Cred- 
it, if  there  be  such  things  as  natural  rights,  is  one  of  them ; 
consequently,  any  policy  which  modifies  or  alters  the  distri- 
bution of  its  benefits  is  unjust  to  those  who  are  thereby 
deprived  of  their  rightful  share. 


*  In  support  of  these  positions  I  may  here  present  some  historical  facts  which  have 
come  to  my  knowledge  since  this  work  was  written.  When  the  State  of  Mississippi 
was  set  off  from  the  Territory  of  Alabama,  a  misunderstandihg  occurred  between  those 
two  governments  in  relation  to  the  boundary  line.  Both  claimed  a  strip  of  land  suffi- 
ciently large  to  form  several  counties ;  neither  one  would  permit  the  other  to  exercise 
jurisdiction  over  it;  and  the  consequence  was  that  the  inhabitants  were  left  to  shift  for 
themselves,  without  laws  or  legal  tribunals  of  any  kind :  there  was  not  a  judge  nor  a 
lawyer  within  the  limits  of  the  disputed  territory.  This  state  of  things  continued  for 
for  some  years,  during  which  time  the  population  increased,  the  inhabitants  were  pros- 
perous, their  commerce  flournished ;  and  although  sales  were  made  on  credit  to  the 
amount  of  millions,  without  other  guaranty  than  that  which  the  honor  of  the  pur- 
chasers afforded,  not  a  single  delinquency  occurred — not  the  first  bad  debt  was  made. 
These  facts  are  related  on  the  authority  of  the  Hon.  R.  J.  Walker,  who,  I  believe,  was 
personally  cognizant  of  them, 


320  CREDIT.  [PART  n. 

I  can  conceive  of  no  important  benefits  to  be  derived 
from  the  policy  under  consideration,  even  if  it  were  pos- 
sible to  make  its  guaranties  perfect ;  and  as  it  is  now 
modeled  and  enforced  in  the  United  States,  it  must  be 
regarded  as  the  most  stupendous  failure  of  the  age. 
For  one,  and  in  the  capacity  of  one  who  has  had  no  small 
share  of  experience  under  it,  I  can  truly  say  that  I  have 
found  it  safest  to  place  no  reliance  whatever  on  its  prof- 
fered aid.  These  remarks,  as  well  as  all  those  which 
precede,  do  not,  of  course,  apply  to  the  loan  of  houses 
and  lands.  For  reasons  too  obvious  to  notice,  the  law 
should  guaranty  the  return  of  those,  whenever  they 
have  been  let  or  loaned  for  a  stipulated  period. 

I  am  well  aware  that  there  are  but  few  who  will  sub- 
scribe to  the  doctrines  herein  advanced.  The  public 
mind  in  this  country  is  certainly  not  yet  prepared  to  abolish 
all  laws  for  the  collection  of  debts.  Perhaps  it  never 
will  be,  though  I  am  free  to  confess  that  I  confidently 
expect  that  event  to  take  place  at  no  distant  period.  As 
a  most  significant  indication  of  its  approach,  1  would 
point  to  a  kindred  but  mistaken  theory,  which,  although 
but  recently  started,  has  been  received  with  so  much 
favor  that  it  has  already  assumed,  in  many  of  the  states, 
the  form  and  force  of  law.  I  refer  to  the  policy  of 
"  homestead  exemption,"  as  it  is  called.  In  some  of  the 
western  states  this  policy  has  been  adopted  to  the  extent 
of  securing  to  individual  debtors,  when  they  chance  to 
possess  so  much,  an  ordinary  sized  farm  and  its  appur- 
tenances, together  with  the  needful  implements  of  cul- 
ture ;  that  is,  those  states  have  abolished  to  this  extent 
the  legal  remedy  of  creditors. 

Any  valid  reason  that  can  be  urged  in  favor  of  this 
modification  of  the  right  of  property  in  actions,  will,  as 
it  appears  to  me,  apply  with  equal  force  in  favor  of  its 


CHAP.    VI. 


CREDIT.  321 


entire  abrogation ;  while,  on  the  other  hand,  good  reasons 
may  be  offered  in  favor  of  the  latter  which  are  not  appli- 
cable to  the  former.  So  far  as  principle  is  involved,  it 
makes  no  difference  whether  a  debtor, -who  is  able  to  pay, 
withholds  from  his  creditors  $100  or  $10,000.  In  either 
case  the  act  is  dishonest ;  the  difference  is  in  degree,  not 
in  character,  nor  is  the  difference  in  degree  any  greater 
than  the  difference  in  temptation.  In  many  cases,  also,  the 
inconveniences  produced  by  small  delinquences  equal  those 
produced  by  large  ones.  For  example,  where  an  individual 
whose  creditors  are  poor  tradesmen,  mechanics,  or  labor- 
ing men,  avails  himself  of  the  homestead-exemption-law  for 
the  purpose  of  defrauding  them,  they  will  be  likely  to 
feel  more  serious  embarrassment  from  their  trifling  losses 
than  would  large  capitalists  from  the  loss  of  thou- 
sands. 

The  truth  is,  these  homestead-exemption-laws  are 
based  on  a  false  principle.  Their  adoption  is  urged  and 
justified  on  the  ground  that  society  owes  to  its  members 
the  means  of  support,  and  that  a  given  quantity  of  land 
is  an  indispensable  part  of  that  means.  These  grounds 
are  altogether  untenable.  In  a  former  chapter  it  has 
been  shown  that  they  would  not  even  justify  the  state  in 
donating  land  to  individuals ;  and  if  they  will  not  war- 
rant that,  with  what  show  of  justice  or  propriety  can 
they  be  urged  in  favor  of  permitting  one  individual  to 
withhold  from  other  individuals  their  rightful  property  ? 
The  answer  is  clear :  none  whatever.  It  might  almost 
as  well  be  urged  that  the  robber  and  thief  are  entitled  to 
their  plunder,  the  only  difference  being,  that,  in  these 
cases,  the  owners  part  with  their  property  involuntarily, 
while  in  the  case  of  creditors  the  act  is  a  voluntary  one. 
This  distinction  does  not  afford  the  slightest  justification 
to  those  debtors  who  keep,  for  their  own  use  and  benefit, 
28 


322  CREDIT.  [PART  u. 

property  which  rightfully  belongs  to  their  creditors  ;  but 
it  would  justify  the  state  in  abstaining  from  all  interfer- 
ence between  debtors  and  creditors. 

The  policy  of  exempting  homesteads  will  probabty  be, 
like  most  other  measures  founded  in  error,  very  short- 
lived. Its  consequences  are  not  likely  to  be  such  as  its 
advocates  expected  it  to  produce.  It  ^as  supposed  that 
it  would  enable  the  idle,  the  improvident,  and  the  unfor- 
tunate, to  live  on  the  earnings  of  the  industrious  and 
frugal ;  for  it  was  believed  that  the  former  would  still 
succeed  in  obtaining  the  property  of  the  latter  on  credit, 
although  the  legal  obligation  to  return  it,  or  pay  for  it, 
was  annulled.  This  expectation  is  not  likely  to  be  real- 
ized. Already  the  credit  of  merchants  and  others,  in 
those  states  where  these  laws  have  been  adopted,  is  con- 
siderably impaired  ;  and  when  their  credit  shall  be  called 
upon  to  pass  through  one  of  those  commercial  revulsions 
which  periodically  occur,  we  may  expect  to  see  it  redu- 
ced to  limits  of  the  narrowest  kind.  Therefore,  these 
laws,  instead  of  benefiting  the  class  for  whose  especial 
advantage  they  were  made,  will  prove  injurious  by  de- 
priving them  of  their  accustomed  credits.  This  may, 
however,  prove  beneficial  to  them  in  the  end,  inasmuch 
as  it  will  drive  them  into  the  ranks  of  the  diligent  and 
frugal.  At  all  events,  the  contraction  of  credits  cannot 
fail  to  prove  advantageous  to  the  community  at  large  ; 
and  when  the  benefits  which  properly  belong  to  the 
change  of  policy  herein  proposed,  shall  have  been  thus 
accidentally  tasted,  we  may  expect  to  see  homestead 
exeption  laws  give  place  to  the  abrogation  of  all  laws  for 
the  collection  of  debts. 

Before  dismissing  the  subject  of  credit,  it  may  be  well 
to  notice  the  generally  entertained  opinion  that  all  kinds 
of  credit  transactions  tend  to  diminish  the  aggregate 


CFIAP,    VI.]  CREDIT.  323 

demand  for  money — in  other  words,  that  credit  is  an  abscr 
lute  substitute  for  money.  This  doctrine  has  been 
taught  by  almost  every  eminent  writer  on  political  econ- 
omy ;  but  as  the  matter  appears  to  me,  it  is  very  wide 
of  the  truth  nevertheless. 

There  is  one  kind  of  credit  which  certainly  does 
diminish  the  demand  for  metallic  money :  but,  to  the  pre- 
cise extent  of  the  diminution,  it  furnishes  a  substitute 
therefor  in  the  form  of  convertible  paper  money.  I  refer 
of  course  to  the  kind  of  credit  involved  in  the  banking 
system,  and  the  nature  of  which  has  been  sufficiently 
explained  in  a  former  chapter.  There  is,  however, 
another  kind  of  credit,  the  employment  of  which  lessens 
the  aggregate  demand  for  botli  paper  money  and  coin, 
and  that  is,  the  credit  involved  in  bills  of  exchange. 
The  expedient  of  liquidating  debts  due  in  distant  mar- 
kets by  means  of  bills  of  exchange,  could  not  be  resorted 
to  without  tlic  aid  of  credit ;  and  but  for  that  expedient, 
there  would  have  to  be  constant  streams  of  money  pas- 
sing to  and  from  all  the  different  markets  of  the  world. 
The  average  amount  of  money  that  would  be  thus  em- 
ployed, beyond  the  amount  now  employed  in  liquidating 
balances  of  distant  indebtedness,  is  dispensed  with  by 
means  of  this  branch  of  the  credit  system.  There  is 
also  another  form  of  credit  somewhat  analogous  to  this, 
which  is,  where  A  and  B  sell  to  each  other  on  credit,  and 
settle  at  stated  periods  by  a  mere  payment  of  the 
balance,  if  any.  This,  however,  may  be  more  properly 
called  an  indirect  method  of  barter,  than  a  specific  form 
of  credit.  All  other  forms  of  credit  are  destitute  of 
influence  on  the  currency — or  rather,  they  neither  enlarge 
nor  diminish  the  aggregate  amount  of  money  demanded 
for  measuring  and  transferring  the  circulating  wealth  of 
the  commercial  world.  They  merely  change  the  office 


324  CREDIT.  [PART  11. 

of  money  from  that  of  transferring  the  ownership  of  the 
property  or  commodities  sold,  to  that  of  liquidating  the 
obligations  which  represent  them.  Suppose,  for  example, 
that  the  commercial  transactions  in  a  given  market  are 
$1,000,000  per  day,  and  that  they  are  all  entered  into 
on  a  credit  of  6  moths.  It  is  plain  enough  that  the 
amount  of  daily  payments,  in  cash,  will  be  $1,000,000, 
just  the  same  as  if  no  credit  was  given — the  only  differ- 
ence being  that  the  money  is-  em-ployed  in  the  payment 
of  notes  instead  of  the  purchase  of  goods.  Among  the 
multitude  of  expedients  to  which  interest  and  conven- 
ience give  rise  in  commercial  transactions,  there  are  some 
which  may  be  called  exceptions  to  this  rule — such  as 
where  a  party  liquidates  the  claim  of  his  creditors  with 
the  note  of  his  debtor,  or  where  he  employs  it  in  the  pur- 
chase of  goods.  In  these  and  similar  expedients,  credit 
is  a  substitute  for  money  in  the  particular  transactions  to 
which  they  relate  ;  but  the  resort  to  them  is  so  rarer  and 
their  influence  so  slight,  that  they  cause  no  appreciable 
diminution  in  the  aggregate  of  momey  employed  in  com- 
merce. 

The  opinion  that  credit  is  an  absolute  substitute  for 
money,  is  based,  it  would  seem,  on  the  well  known  fact 
that  the  former,  like  the  latter,  possesses  the  power  of 
purchase.  If  it  also  possessed  the  power  of  satisfying 
contracts,  the  opinion  would  be  sound.  It  is  familiar 
knowledge,  however,  that  credit  does  not  possess  this 
power,  except  in  the  peculiar  form  of  it  already  referred 
to.  In  all  others,  money  is  ultimately  called  in  to  per- 
form its  rightful  office. 

It  is  highly  probable,  however,  that  credits  in  their 
ordinary  form,  often  aggravate  the  severity  of  what  is 
termed  a  commercial  crisis ;  and  that  they  do  so  from 
the  very  fact  that  they  only  perform  one  half  the  office 


.VI.]  CREDIT.  325 


CHAP 


of  money.  If  they  were  competent  to  execute  their  own 
engagements,  they  could  have  no  effect,  either  in  the  pre- 
sent or  the  future,  on  the  demand  for  money ;  nor  could 
they  have  if  the  extent  to  which  they  are  substituted  for 
money,  in  the  act  of  purchase,  were  invariable.  But 
neither  of  these  attributes  appertain  to  credit.  While 
its  purchasing  power  is  nearly  unlimited,  the  only  means 
that  it  affords  of  cancelling  its  own  engagements,  is  the 
expedient  of  a  legal  discharge  under  bankrupt  laws  ; 
and  while  the  extent  to  which  it  is  employed  as  a  means 
of  purchase  is  governed  by  no  fixed  rules  or  uniform 
laws,  that  extent  is  found  to  be  subject  to  great  varia- 
tions— variations  which  correspond,  very  nearly,  in  time, 
place,  and  degree,  with  the  oscillations  in  the  amount 
of  money  in  circulation.  We  might  reasonably  expect 
that  the  larger  the  amount  of  money  in  circulation,  the 
less  use  would  be  made  of  its  substitute  as  a  means  of 
purchase ;  but  the  reverse  appears  to  be  the  fact,  and  a 
closer  examination  will  show  us  that  it  could  not  well  be 
otherwise.  When  the  volume  of  money  is  enlarged, 
prices  rise ;  the  rise  of  prices,  by  producing  an  apparent 
general  prosperity,  engenders  a  spirit  of  speculation  ; 
speculation  produces  an  augmentation  of  credits,  and 
since  an  increase  of  purchases  on  credit  do  not  require, 
until  a  future  period,  a  corresponding  increase  of  money 
to  pay  for  them,  it  follows  that  the  inflation  of  prices  is, 
by  the  mischievous  influences  of  credit,  often  carried  far 
beyond  the  point  at  which  they  would  be  arrested  under 
a  system  of  cash  payments.  So,  on  the  other  hand, 
when  the  crisis  arrives — when  the  enlarged  contracts 
entered  into  on  credit  are  to  be  met,  and  when  the  pay- . 
ment  of  foreign  indebtedness,  the  contraction  of  the 
banking  system,  and  the  hoarding  consequent  on  the 
previous  inflation  of  prices,  have  diminished  the  amount 


326  CREDIT.  [PART  u. 

of  money  in  circulation — then  credits,  instead  of  being 
extended  to  fill  the  vacuum  in  the  purchasing  power, 
caused  by  the  diminished  circulation  of  money,  are  also 
greatly  diminished  ;  by  which  means  they  increase  the 
intensity  of  the  reaction,  and  thereby  aggravate  the  dis- 
aster of  the  crisis. 

The  present  system  of  mercantile  credits  is  not,  I 
fancy,  obnoxious  to  the  charge  of  originating  those  infla- 
tions of  prices  which  first  intoxicate  and  afterward  pros- 
trate the  commercial  community.  It  merely  enters  in, 
after  the  movement  has  been  started,  as  an  adjunct  to 
the  prime  cause.  That  cause  is  to  be  found  in  the  var- 
iations of  the  aggregate  amount  of  money  in  circulation, 
and  in  the  constant  ebbing  and  flowing  of  portions  of  it 
between  the  different  markets  of  the  world.  If  no  other 
money  existed  than  that  which  is  made  of  the  precious 
metals,  these  causes  would  be  sufficiently  active  to  pro- 
duce serious  commercial  revulsions ;  but  stimulated  as 
they  are  by  the  partial  substitution  of  convertible  paper 
money  for  coin,  the  volume  of  the  substitute  being  sub- 
ject to  the  ever  recurring  expansions  and  contractions  of 
the  banking  system,  they  must  be  still  more  potent  in  the 
production  of  these  evils.  As  before  remarked,  however, 
it  is  to  the  concurrent  expansion  and  contraction  of  cred- 
its, to  which  these  causes  give  rise,  that  we  must  mainly 
attribute  the  intensity  of  commercial  revulsions,  as  well 
as  the  general  bankruptcy  which  they  often  produce. 

If  credits  were  found  to  contract  as  the  volume  of 
money  increased,  and  to  expand  as  it  diminished,  they 
would  be  highly  useful  as  a  means  of  counteracting  the  vi- 
bration of  prices :  but  since  experience  has  abundantly  pro- 
ved that  the  oscillations  of  credit,  under  the  present  system, 
always  correspond  with  those  of  money,  we  must  note  the 
fact  as  another  evidence  of  the  impolicy  of  that  system. 


327 


CHAPTER  vu. 
OF   SLAVERY. 


Considered  as  a  political  institution,  Slavery  consists 
in  the  recognition  and  social  guaranty  of  the  right  of 
property  in  human  beings.  This  right  is  clearly  incon- 
sistent with  the  principles  of  justice  and  political  equal- 
ity. Its  exercise  necessarily  deprives  the  enslaved  of 
their  relative  rights  ;  it  in  fact  despoils  them  of  every- 
thing worth  possessing,  except  life,  and  it  often  renders 
that  burdensome.  For  these  reasons,  slavery,  instead 
of  being  legalized  and  established  as  one  of  the  institu- 
tions of  society,  should  be  strictly  interdicted  by  all 
governments,  and  especially  by  those  of  the  republican 
type.  No  considerations  of  any  kind  can  possibly  jus- 
tify a  state  in  the  adoption  of  a  system  so  repugnant  to 
every  dictate  of  justice — so  directly  in  conflict  with  the 
first  and  highest  principles  for  the  maintenance  of  which 
governments  themselves  were  instituted. 

Having  thus  summarily  disposed  of  the  political  ques- 
tion involved  in  slavery, — having  shown  that,  as  an  insti- 
tution of  the  state,  it  is  founded  on  principles  so  funda- 
mentally wrong,  that  no  possible  combination  of  circum- 
stances can  justify  its  establishment — we  might  dismiss 
the  topic  as  one  meriting  no  further  consideration.  Un- 
fortunately, however,  the  question  of  estalishing  slavery 
is  not  presented  to  us  as  an  original  proposition,  but  as 
one  which  some  states  have  already  decided  in  the  affirm 
ative,  and  reduced  to  practice.  We  must  therefore 


328  SLAVERY.  [PART  u. 

consider  the  right  of  property  in  human  beings  as  an 
existing  legality,  and  as  one  which  is  constantly  produ- 
cing fruit  of  some  kind  or  other.  By  ascertaining  the 
character  of  that  fruit,  we  shall  be  able  t$>  determine, 
not  whether  it  is  such  as  to  justify  the  policy  by  which 
it  is  produced — for  that  we  have  seen  to  be  impossible — 
but  whether  it  tends  to  aggravate  or  mitigate  the  iniquity 
of  that  policy.  It  is  believed  by  many  that  the  evils  of 
slavery  are  reciprocal,  or  in  other  words,  that  the  sys- 
tem is  injurious  to  the  master  as  well  as  to  the  slave.  If 
this  belief  is  well  founded,  a  clear  demonstration  of  the 
fact  could  scarcely  fail  to  give  a  death-blow  to  the  sys- 
tem, for  it  needs  but  that  conviction  among  slaveholders 
to  render  its  voluntary  abandonment  both  certain  and 
speedy. 

There  are  various  aspects  in  which  slavery  may  be 
viewed,  in  reference  to  its  effects  on  human  happiness. 
It  unquestionably  exercises  a  strong  influence  on  the 
moral  and  social  condition  of  society,  as  well  as  on  its 
political  and  economic  condition ;  and  it  is  not  unlikely, 
if  we  were  to  take  a  general  survey  of  the  subject,  we 
should  find  that  the  influences  first  named  are  more  im- 
portant and  of  a  more  pernicious  character  than  the 
second.  This,  however,  is  not  the  proper  place  to  inves- 
tigate them,  except  so  far  as  may  be  necessary  to  ascer- 
tain their  indirect  effects  on  the  production,  distribution 
and  consumption  of  wealth.  These  last  being  the  only 
consequences  with  which  political  economy  is  concerned, 
I  shall  of  course  refrain  from  noticing  any  others.  It 
may  be  well  to  premise,  also,  since  there  are  various 
kinds  and  degrees  of  involuntary  servitude,  that  the 
considerations  I  am  about  to  offer  will  be  confined  to  that 
specific  form  of  slavery  which  prevails  in  tae  southern 
states  of  this  republic. 


CHAP.    VII. J  SLAVERY.  329 

The  first  inquiry  then  is,  does  slavery  tend  to  enrich 
the  communities  in  which  it  exists,  or  does  it  tend  to  im- 
poverish them  1  As  respects  its  influence  on  the  enslaved, 
the  question  is  easily  answered,  since  it  not  only  divests 
them  of  all  property,  but  of  all  the  means  of  future  acqui- 
sitions. But  as  relates  to  its  effects  on  the  interests  of 
slave-owners  and  other  freemen,  the  correct  answer  is  not 
so  obvious.  Statistics  and  observation  have  indeed  proved, 
most  conclusively,  that  the  non-slaveholding  states  of 
our  Union  are  more  prosperous  than  the  slaveholding — 
the  fact  is  no  longer  disputed  by  slaveholders  themselves  ; 
but  since  many  of  the  latter  deny  that  the  less  prosper- 
ous condition  of  the  south  is  justly  attributable  to  sla- 
very, it  will  be  necessary  to  apply  the  natural  laws  of 
trade  to  that  system  of  production  and  distribution,  in 
order  to  ascertain  what  kind  of  economic  fruits  it  is 
really  calculated  to  produce. 

It  has  been  found  that  negro  slavery,  by  degrading  all 
those  employments  to  which  the  slave  is  put,  com- 
pletely excludes  freemen  from  similar  occupations,  where - 
ever  that  system  prevails.  In  consequence  of  this,  the 
industry  employed  in  agriculture  and  the  mechanic  arts, 
as  well  as  in  all  kinds  of  menial  occupations,  at  the 
south,  consists  almost  wholly  of  the  service  of  slaves. 
The  non-intellectual  quality  of  that  service  excludes  it 
from  the  learned  professions,  and  from  the  higher  pro- 
cesses of  commerce  ;  insomuch  that  these  vocations 
are  prosecuted  entirely  by  freemen.  It  will  be  perceived, 
therefore,  that  the  two  classes,  the  enslaved  and  the 
free,  have  each  an  exclusive  field  in  which  to  exercise 
their  industrial  powers.  That  in  which  slaves  are  em- 
ployed requires  an  outlay  of  little  else  than  muscular 
strength,  while  the  field  appropriated  to  freemen  calls 
chiefly  for  intellectual  effort.  In  other  words,  this  sys- 


330  SLAVERY.  [PART  u. 

tern  completely  separates  Labor  from  Skill,  and  converts 
the  former  into  Capital.  Under  it,  laborers  do  not,  as 
they  do  in  a  free  state,  constitute  a  distinct  and  inde- 
pendent partner  in  the  productive  firm,  entitled  to  one 
quarter  of  the  gross  profits  ;  but,  like  the  plough  and 
the  ox,  they  are  merely  productive  machines  belonging 
to  owners  and  subject  to  their  will. 

This  conversion  of  Labor  into  Capital  cannot  fail  to 
diminish  the  productiveness  of  that  agent.  The  slave 
has  no  personal  interest  in  the  results  of  his  own  labor. 
He  knows  that  however  much  of  revenue  he  may  pro- 
duce, his  own  share  will  be  strictly  limited  to  the  neces- 
saries of  life  ; — he  knows  that  diligence  will  not  better 
his  pecuniary  condition,  nor  idleness  render  it  worse. 
In  a  word,  the  hope  of  gain  and  the  fear  of  want  are 
both  extinguished  by  the  deprivation  of  freedom.  The 
absence  of  these  two  most  powerful  incentives  to  dili- 
gence and  carefulness,  must  necessarily  render  slave 
labor  extremely  inefficient.  About  the  only  motive  that 
prompts  the  slave  to  exertion,  is  a  dread  of  the  lash. 
This  motive  is  probably  strong  enough  in  most  cases  to 
overcome  the  natural  aversion  to  labor,  but  all  expe^i- 
ence  testifies  that  it  is  an  extremely  feeble  incentive 
compared  to  the  desire  of  gain  and  other  motives  which 
prompt  the  industrial  efforts  of  freemen.  Under  its 
influence  the  slave  aims  to  do  as  little  as  circumstances 
will  permit,  while  the  freeman  strives  to  do  as  much  as 
he  possibly  can  ;  whence  it  is  evident  that  the  labor  of 
the  former  must  be  less  productive  than  that  of  the  lat- 
ter. But  the  diminution  of  quantity  is  not  the  only 
influence,  nor  even  the  worst,  which  slavery  exerts  on  the 
productiveness  of  labor  :  a  still  more  pernicious  conse- 
quence is  to  be  found  in  its  deterioration  of  the  quality 
of  that  labor.  The  slave  has  no  motive  to  strive  for 


CHAP.    VII. J  SLAVERY.  831 

excellence  or  increased  proficiency  in  the  arts  of  produc- 
tion, nor  is  it  the  habit  of  his  owner  to  expend  much  of 
either  effort  or  money  in  attempting  to  educate  him 
therein.  Indeed  the  latter,  under  the  joint  influence  of 
fear  and  avarice,  carefully  withholds  from  the  former  all 
the  means  usually  employed  in  promoting  mental  devel- 
opment. Reared  thus  in  ignorance,  slaves  are  necessarily 
put  to  such  employments  as  require  but  little  of  intel- 
lectual effort ;  and,  since  they  have  no  hope  of  reward 
or  other  adequate  inducement  to  exercise  that  little  to 
the  best  of  their  ability,  we  cannot  but  expect  their  skill 
to  become  less  and  less,  until  their  service  is  scarcely 
distinguishable  from  that  of  the  ox  or  the  mule,  except 
by  its  inferiority  of  muscular  power. 

These  views  are  in  perfect  harmony  with  the  results 
of  experience.  All  who  "are  familiar  with  the  subject 
know  that  in  those  simple  occupations  which  require  the 
outlay  of  muscular  strength  only,  slave- labor  is  not 
more  than  half  as  efficient  as  the  labor  of  freemen  ;  and 
they  also  know  that  in  the  more  recondite  arts  of  pro- 
duction, where  much  of  intellectual  and  artistic  skill  is 
required,  the  difference  in  favor  of  the  latter  is  more 
than  a  hundred-fold. 

Nor  are  these  the  only  paralizing  effects  on  the  pro- 
duction of  wealth,  with  which  slavery  is  chargeable. 
It  tends  to  prevent  the  accumulation  of  legitimate  capi- 
tal, by  occupying  its  place  with  human  chattels.  So 
strong  and  certain  is  this  tendency,  that  we  generally 
find  the  joint  value  of  the  two  no  greater  than  that  of 
capital  alone  under  the  free  system.  In  fact  the  con- 
version of  Labor  into  Capital  appears  to  dry  up  one  of 
the  four  prime  sources  of  production  altogether — with- 
out, however,  as  will  be  shown  presently,  suppressing 
with  equal  completeness  one  of  the  agencies  of  con- 
usmption. 


332  •  SLAVERY.  [PART  u. 

This  system  of  production  also  tends  to  exclude  Skill, 
and  to  vitiate  the  quality  of  that  which  it  admits  ;  for 
while  it  completely  suppresses  the  skill  of  the  enslaved 
class,  it  rarely  fails  to  render  their  proprietors  either 
too  proud,  too  indolent,  or  too  ignorant  of  the  science 
and  arts  of  production,  to  superintend  and  direct  the 
labor  of  slaves.  Their  usual  alternative  is  to  employ 
overseers.  These  are  necessarily  men  of  slender  quali- 
fications, because  no  one  of  much  capacity  or  self  res- 
pect will  accept  of  a  situation  which  is  so  universally 
regarded  as  despicable  and  degrading.  It  appears, 
therefore,  that  the  skill  which  co-operates  with  slave- 
labor  must  be  about  as  inefficient  as  I  have  shown  that 
kind  of  labor  to  be.  Land,  the  other  co-operating  force, 
is  a  passive  agent.  Its  productiveness  is  chiefly  depen- 
dent on  the  degree  of  energy  and  skill  with  which  it  is 
cultivated.  Consequently,  to  whatever  extent  slavery 
weakens  the  efficiency  of  Skill,  Labor,  and  Capital,  to 
precisely  the  same  extent  it  diminishes  the  productive- 
ness of  Land. 

We  find,  then,  that  slavery  suppresses  one  of  the 
prime  agents  of  production,  and  seriously  weakens  tl]e 
efficiency  of  the  remaining  three ;  insomuch  that  I  think 
we  may  safely  conclude  that  the  aggregate  production  of 
wealth,  under  it,  is  less  than  half  the  amount  that  an 
equal  number  of  freemen  will  produce. 

While  slavery  thus  lessens,  by  more  than  50  per 
cent.,  the  gross  production  of  wealth,  it  does  not,  because 
itcannot  without  detriment  to  the  owner's  interest,  reduce 
the  share  consumed  by  slaves  below  the  point  essential 
to  the  development  and  maintenance  of  their  physical 
powers.  To  this  point  the  consumptions  of  a  large  por- 
tion of  the  laboring  class  of  freemen  are  also  reduced, 
in  some  cases  by  necessity,  in  others  by  choice  ;  but, 


CHAP.    VII. J  SLAVERY.  333 

whether  their  abstinence  is  voluntary  or  involuntary, 
their  productive  powers  are  free  from  that  paralizing  in- 
fluence which  the  act  of  enslavement  exerts.  Conse- 
quently, the  larger  average  consumptions  of  freemen 
cannot  be  regarded  as  one  of  the  causes  of  their  superi- 
ority as  productive  agents,  except  so  far  as  wealth  is 
consumed  in  their  industrial  education.  It  is  evident, 
however,  that  where  the  aggregate  production  is  less,  the 
aggregate  consumption  must  also  be  less ;  because  a 
community  cannot,  in  the  long  run,  consume  more  than 
it  produces,  nor  indeed  quite  so  much  without  arresting 
its  own  growth.  Under  slavery  the  consumptions  of 
Labor  are  strictly  limited  to  the  necessaries  of  life,  while 
under  freedom  a  large  share  of  that  class  cf  producers 
partake  of  the  luxuries  of  life.  This  compulsory  absti- 
nence of  the  enslaved  will  compensate  in  some  measure 
for  the  inefficiency  of  their  productive  powers ;  but 
whether  it  will  fully  compensate  for  that  inefficiency, 
remains  to  be  seen.  It  must  indeed  do  much  more  than 
this  before  the  system  can  be  justified,  even  on  economic 
grounds  ;  for  unless  it  compensates  for  all  the  detriments 
to  production,  with  which  slavery  is  chargeable,  it  is 
evident  that  the  system  must  be  injurious  to  the  master 
as  well  as  to  the  slave. 

The  important  inquiry  then  is,  does  the  saving  accom- 
plished through  the  forced  frugality  of  slaves  equal  the 
losses  occasioned  by  the  paralizing  effects  of  slavery  on 
the  sources  of  production  ?  A  complete  determination 
of  this  question,  on  purely  theoritic  grounds,  would  re- 
quire a  more  extended  consideration  of  the  subject  than 
it  is  deemed  necessary  to  enter  upon.  The  question  can 
be  determined  with  sufficient  accuracy  by  a  much  shorter 
method.  Indeed,  if  I  have  not  over-estimated  the  losses 
incident  to  the  slave  system  of  production,  the  question 
24 


334  SLAVERY.  [PART  n. 

is  already  answered  ;  for,  according  to  that  estimate, 
if  slaves  should  consume  nothing  at  all,  their  abstinence 
would  not  compensate  for  those  losses,  as  may  be 
demonstrated  in  a  single  sentence.  For  example  : 
A  community  in  which  slavery  exists  will  produce 
no  more  than  half  the  quantity  of  wealth  that  an 
equally  numerous  community  of  freemen  will  produce ; 
freemen  constitute  more  than  one  naif  of  the  gross  pop- 
ulation in  most  if  not  all  of  our  slaveholding  states ; 
therefore,  if  the  freemen  of  that  section  should  engross 
the  entire  wealth  produced  there,  they  would  even  then 
be  poorer,  as  a  body,  than  the  freemen  of  the  non- 
slaveholding  states,  or  rather,  they  would  have  less  rev- 
enue at  their  command,  less  wealth  to  consume.  But 
they  are  not  the  sole  recipients  of  the  wealth  produced 
there.  Instead  of  engrossing  the  whole,  they  merely 
monopolize  the  profits.  Their  slaves  are  neither  ob- 
tained nor  supported  without  cost.  They  are  not  even 
furnished,  as  they  formerly  were  by  African  traders,  at 
the  cheap  rates  of  stolen  goods,  the  article  being  now 
contraband  with  us ;  nor  can  they  subsist  on  the  wind. 
On  the  contrary,  they  are  reared,  lodged,  clothed,  fed, 
and  reproduced,  out  of  the  products  of  their  own  labor. 
With  this  unavoidable  abatement,  therefore,  the  mean 
revenue  of  the  freemen  of  that  section  must  be  vastly 
less  than  ours. 

This  reasoning  would  be  perfectly  sound,  and  the 
demonstration  complete,  provided  mankind  were  the  only 
consumers  of  wealth.  Such  is  not  the  case,  however. 
Productive  capital  in  all  its  forms,  as  well  as  in  the  anom- 
alous form  of  slaves,  is  a  great  consumer.  Under  the 
free  system  of  production,  where  there  are  four  prime 
agents,  its  creation,  repair  and  renewal,  absorb,  as  I  have 
shown  in  a  former  chapter,  just  one- third  of  the  cost  ele- 


CHAP.    VII.]  SLAVERY.  335 

ment  of  value,  which  is  nearly  equal  to  one-third  of  all 
the  wealth  produced,  because  the  profit  element  of  value 
is  a  mere  trifle  compared  with  the  cost  element.  Under 
the  slave  system  of  production,  where  there  are  but 
three  prime  agents — where  productive  capital  includes 
labor — its  maintenance  of  course  absorbs  a  much  larger 
share  of  the  gross  products, — certainly  not  less  than 
half  of  the  cost  element  of  the  whole,  and  probably  not 
less  than  two-thirds  of  that  element.  Therefore,  with 
this  correction  of  the  foregoing  deduction,  we  still  find 
that  the  ecomonic  condition  of  a  slaveholding  community 
must  be  vastly  inferior  to  that  of  a  community  of  free- 
men. Neither  the  restraints  which  that  system  imposes 
on  the  consumptions  of  its  victims,  nor  any  other  advan- 
tages inherent  in  it,  can  compensate  the  proprietary  class 
for  a  moiety  of  the  injuries  which  it  inflicts  on  them 
through  its  paralization  of  the  sources  whence  all  wealth 
is  derived.  Lest,  however,  I  may  have  over-estimated 
the  extent  of  these  injuries,  it  may  be  well  to  verify  the 
theoretic  conclusions  arrived  at,  by  a  contrast  of  the 
respective  conditions  and  natural  advantages  of  the 
slaveholding  and  non-slaveholding  sections  of  our  coun- 
try. 

Let  us  then  endeavor  to  ascertain  which  section  en- 
joys the  higher  rate  of  profit  and  the  larger  degree  of 
wealth.  Judging  from  such  statistical  evidences  as  we 
possess,  it  would  seem  that  the  average  rate  of  interest, 
and  consequently  the  rate  of  profit  in  general,  is  about 
the  same  in  the  slaveholding  as  in  the  non-slaveholding 
states  ;  and  that  the  mean  degree  of  wealth  belonging  to 
the  freemen  of  the  two  sections  is  also  about  equal,  pro- 
vidcfl  we  include  with  the  wealth  of  the  southern  section 
the  market  value  of  its  slaves.  But  in  estimating  the 
relative  wealth  of  a  slaveholding  and  a  non-slaveholding 


SLAVERY.  [PART  n. 

community,  it  is  manifest  that  we  should  either  exclude 
from  the  wealth  of  the  former  the  market  value  of  human 
chattels,  or  include  with  that  of  the  latter  the  vastly 
higher  value  of  its  free  laborers;  for  as  an  element  of 
national  wealth,  or  strength,  or  prosperity  of  any  kind, 
the  latter  are  infinitely  superior  to  slaves.  Indeed,  to 
render  the  comparison  a  perfectly  fair  one,  we  should 
not  only  exclude  slaves  from  our  estimate  of  wealth,  but 
include  them  in  our  estimate  of  population,  because 
they,  like  their  masters,  are  human  beings,  and  consti- 
tute a  part  of  the  population  of  the  states  in  which 
they  are  held.  If  we  were  to  make  an  estimate  of  the 
relative  wealth  of  the  two  sections  of  our  country  on 
this  basis,  (and  it  is  certainly  the  correct  one  if  we  wish 
to  consider  the  subject  in  the  pure  light  of  republican- 
ism,) we  should  probably  find  that  the  average  degree  of 
wealth  at  the  north  is  not  less  then  five-fold  what  it  is 
at  the  south.  But  since  our  present  object  is  to  ascer- 
tain the  effects  of  slavery  on  the  economic  interests  of 
the  proprietary  class,  it  is  incumbent  on  us,  for  the  pur- 
poses of  this  inquiry,  to  exclude  slaves  from  our  estimate 
of  population,  and  to  class  them  as  property. 

According  to  this  basis  of  computation,  how  stands 
the  relative  wealth  of  the  north  and  the  south  ?  I  have 
said  that  such  evidences  as  our  meagre  statistics  of 
wealth  afford,  seem  to  indicate  something  like  an  equal- 
ity between  the  two  sections ;  but  I  think  a  closer  in- 
spection of  the  subject  will  satisfy  us  that  these  evi- 
dences are  deceptive.  I  believe  we  shall  find  the  fact  to 
be,  that  the  average  wealth  of  the  freemen  of  the  north, 
although  they  include  the  "  hewers  of  wood  and  drawers 
of  water,"  (a  class  which  we  count  as  property  in  the 
other  section,)  is  much  greater  than  that  of  the  freemen 
of  the  south.  When  we  come  to  scrutinize  the  matter 


CHAP.    VII. J  SLAVERY.  337 

closely,  we  cannot  fail  to  perceive  that,  with  the  excep- 
tion of  property  in  slaves,  the  south  is  possessed  of  but  a 
thin  drapery  of  productive  capital, — so  thin  that  with 
the  aid  of  an  abundant  and  fertile  soil,  and  the  cheap 
labor  of  slaves,  the  net  profits  are  so  meagre  that  the 
proprietary  class,  although  it  shares  the  whole  of  those 
profits,  is  compelled  to  forego  many  of  the  comforts  of 
life,  and  most  of  its  luxuries.  In  evidence  of  this,  it 
may  be  remarked  that  the  people  of  that  section  have 
but  few  railroads  and  canals,  nor  scarcely  a  turnpike- 
road  or  other  highway  that  can  be  called  passable.  The 
steamboats  which  navigate  their  noble  rivers,  and  the 
ships  that  visit  their  sea-ports,  are  mostly  owned  either 
in  the  free  states  or  abroad.  A  majority  of  their  mer- 
chants are  enterprising  adventurers  from  other  regions, 
who  have  gone  there,  not  with  the  intention  of  making  it 
their  permanent  home,  but  for  the  purpose  of  acquiring 
a  fortune  to  be  enjoyed  elsewhere.  They  have  but  few 
mills,  and  but  little  machinary  of  any  kind, — even  the 
mechanic  arts  are  scarcely  known  among  them.  Most 
of  their  dwellings  are  of  the  rudest  and  cheapest  kind, 
with  but  few  barns  or  other  out-buildings,  except  negro 
huts.  Their  lands  are  but  imperfectly  prepared  for  till- 
age, badly  fenced,  and  wretchedly  cultivated ;  in  proof 
of  which,  it  may  be  remarked  that  cotton  plantations 
are  often  worn  out  and  abandoned  before  the  original 
forest  has  been  entirely  removed  from  any  part  of  them  : 
the  larger  trees  are  not  felled,  but  merely  girdled  and 
left  standing  in  their  desolation,  fit  monuments  of  the 
blighting  effects  of  the  system  by  which  they  were  des- 
poiled of  their  native  vigor  and  beauty.  They  have  no 
accumulation  of  the  products  of  former  years.  They 
have  no  capital  invested  in  the  free  states  or  loaned  on 
foreign  securities.  They  have  (comparatively)  but  few 


SLAVERY.  [PART  n. 

churches,  colleges,  or  charitable  institutions,  nor  are 
they  well  provided  with  common  schools.  In  a  word, 
they  have  but  little  real  wealth  in  their  possession ;  nor 
is  that  little  their  own. 

ft  is  well  known  that  the  rule  by  which  the  south 
governs  her  commercial  transactions  with  other  sections 
is,  to  sell  for  cash  and  buy  on  credit.  The  merchants  of 
that  section  make  their  purchases  from  northern  mer- 
chants on  a  credit  of  six,  eight,  or  twelve  months,  and 
they  re-sell  to  the  planters  on  a  similar  credit,  while  the 
latter  invariably  sell  their  products  for  cash.  They  sell 
most  of  their  own  products,  and  they  get  nearly  all  their 
supplies  from.  us.  Consequently,  the  south  is  at  all 
times  indebted  to  the  north  for  nearly  one  year's  pur- 
chases, which,  of  course,  is  nearly  equal  to  the  value  of 
their  annual  products,  and  probably  fully  equal  to  all 
the  productive  capital  in  their  possession,  exclusive  of 
slaves.  According  to  this,  the  people  of  that  section 
have  no  real  wealth  ;  their  only  property,  exclusive  of 
the  property  of  others  held  by  them,  consists  of  land 
and  slaves.  But  as  we  are  considering  these  as  genuine 
wealth,  we  must  place  their  market  value  in  the  bal- 
ance against  the  wealth  of  an  equal  number  of  north- 
ern freemen.  The  paucity  of  their  productive  capital 
renders  the  market  value  of  their  land  so  very  low,  that 
it  is  as  nothing  compared  with  the  market  value  of  land 
at  the  north.  I  have  very  little  doubt  that  the  land 
alone,  of  the  north,  would  command  a  sum  as  far  ex- 
ceeding the  entire  wealth  of  the  south,  including  slaves, 
as  the  population  of  the  north  exceeds  the  free  popula- 
tion of  the  south;  besides  which,  we  have  productive 
capital  at  least  equal  in  value  to  all  our  land.  Accord- 
ing to  this  estimate,  which  I  feel  confident  is  not 
more  favorable  to  the  north  than  the  facts  will  justify, 


CHAP.    VII.  J  SLAVERY.  339 

our  average  degree  of  wealth  is  at  least  double  that  of 
southern  freemen,  including  the  market  value  of  their 
slaves. 

That  this  great  difference  in  our  favor  is  solely  attribu- 
table to  the  existence  of  slavery  at  the  south,  is  evident 
from  the  fact  that  nature  has  been  more  bountiful  to  that 
section  than  to  this.     She  has  given  it  a  richer  soil  and 
a  more  genial  climate,  nobler  rivers  and  more  luxuriant 
forests.     She  has  also  given  it  an  almost  perfect  monop- 
oly of  the  growth  of  cotton, — a  product  which  no  part 
of  the  civilized  world  can  now  dispense  with,  and  which 
bids  fair,  at  no  distant  day,  to  rival  all  others  in  import- 
ance.    In  addition  to  these  rich  gifts  of  nature,  our  gov- 
ernment has  conferred  on  the   agriculturists  of  that  sec- 
tion, the  benefits  of  a  thirty  per  cent,  duty  on  imported 
sugars  ;  which,  in  practice,  amounts  to  something  like 
an  artificial  monopoly  of  the  home  market  for  that  arti- 
cle.    But  with  all  these  accumulated   advantages,  the 
freemen  of  that  section  have  less  wealth,  toss  security  of 
person  and  property,  and  less  of  every  other  element  of 
prosperity  and  progress,  than  those  of  the  north.     Nor 
does  the  system  afford  any  compensation  for  these  evils ; 
at  least  there  are  none  to  be  found  within  the  province  of 
political  economy,  and  I  believe  its  warmest  friends  have 
never  maintained  that  its  moral  and  social  tendencies 
are  of  a  salutary  kind.     We  must  therefore   conclude 
that  it  robs  its  victims  of  their  dearest  rights,  and  sinks 
them  almost  to  a  level  with  the  brute  creation,  for  no 
worthier  or  more  beneficent  end  than  that  of  narrowing 
the  circle  of  their  owner's  enjoyments. 


ERRATA. 


Page   28,  line  28,  for  "  designated '  read  "  designed." 
"      37,     "     20,  for  "  transferred"  read  "  transformed." 
"      85,     "   ^8,  for  "  practicable"  read  "practical." 
"    126,     "     15,  for  "proportion"  read  "proposition." 
"    132,     "       5,  after  the  word  "rate,"  insert  "of  profit" 

"    140,  "     23,  for  "  unsuccessful"  read  "  unsuccessfully." 

"    161,  "     11,  for  "order"  read  "odor" 

"    191,  "     33,  for  "  hopeless"  read  "  hopelessly." 

"    200,  "       1,  after  the  word  "  have"  insert  "  shown" 

"    210,  "     29,  for  "  equality"  read  "  equity" 

"    216,  "     30,  for  " ration"  read  "ratio." 

"    245,  "     14,  for  "  beating"  read  "  beaten." 

"    269,  "       6,  for  "  qualities"  read  " quantities" 

"    281,  "     32,  for  "$130"  read  "$150." 

Besides  which,  there  are  errors  in  orthography  and   punctuation, 

which  it  is  not  deemed  necessary  to  notice. 


Mr.  Opclykc  ou  the  Currency. 

To  Hon.  S.  P.  Cfiase,  Secretary  of  the  Treasury  : 

DEAR  SIR  :  In  compliance  with  my  promise,  I 
embrace  the  first  leisure  hour  sine*  meeting  you  in 
Washington,  to  submit  the  reasons  which  induce  me 
to  favor  the  emission  of  one  hundred  and  fifty  mil- 
lions in  iundable  Treasury  notes,  without  interest 
and  to  be  made  a  legal  tender  In  payment  of  debts. 

In  the  first  place,  I  believe  this  measure  to  be  indis- 
pensable to  the  maintenance  of  the  credit  and  honor 
of  the  Government.  Unless  its  heavy  floating  debt 
sh;«ll  be  paid  with  reasonable  promptitude,  and  its 
rapidly-accruing  liabilities  provided  for,  it  will  soon 
find  difficulty  in  obtaining  supplies  for  the  army  at  any 
price.  The  delay  of  payment  that  has  already  occur- 
red has  depressed  its  certificates  of  indebtedness  eight 
or  ten  per  cent. 

How  els*  shall  these  immediate  liabilities  be  met  ? 
Three  other  modes  have  been  suggested :  First,  by 
taxation  ;  second,  by  the  sale  of  Government  stocks  to 
the  highest  bidders ;  third,  by  paying  tne  public  cred- 
itors in  Treasury  notes  bearing  interest,  or  in  stocks. 
These  are  the  only  alternatives  that  have  been  pro- 
posed, and  I  know  of  no  other  resource,  since  the 
Banks  have  no  longer  the  disposition  or  the  means 
to  take  further  loans.  Let  us  examine  each  of  these 
methods. 

The.first  is  legitimate,  but  unavailable.  Taxation 
must  be  resorted  to,  and  that  liberally  and  promptly ; 
but  the  proceeds  cannot  be  realized  in  time  or  in 
amount  sufficient  to  meet  the  present  emergency. 
The  second  alternative  would  subject  the  Govern- 
ment to  a  heavy  loss,  and  eadly  impair  its  credit.  I 
assume  that  nothing  short  of  one  hundred  millions 
will  suffice  to  meet  the  wants  of  Government  for  the 
present  and  immediate  future.  The  floating  debt  is 
supposed  to  be  upward  of  fifty  millions  already,  and 
it  will.,,  doubtless,  reach  one  hundred  millions  before 
means  of  payment  can  be  provided  by  any  of  the 
methods  proposed.  The  public  creditors  are  clam- 
orous for  their  pay,  and  are  suffering  serious  incon- 
venience and  loss  for  want  of  it.  If  it  is  in  the 
power  of  Government  to  pay  them,  good  faith  and 
sound  policy  alike  demand  that  it  should  do  so  with 
all  possible  promptitude.  To  throw  upon  the  market 
one  hundred  millions  ot  Government  securities,  to  be 
sol«t tg  the  highest  bidders,  iu  the  present  condition 
of  /7^7~'1*iUh  the  credit  of  Government  weakened 
by  /  **«*dGH  Jf'jv*fi()lriuils'  *h?  market  already, 


ot  'OK  'Jtm^B          WA9°  '*«["<*  ;r— ffa!g«» 


,  jfelmmrjr  2> 1862L 


gold  and  silver  ootn,  its  average  In  nil  commercial 
co  untiles  is,  as  the  statistics  of  money  prove,  about 
twenty  dollars  per.  capita,  this  being  the  quantity  re- 
quired, at  the  present  cost  of  producing  the  precious 
metals,  to  make  the  exchange  of  money  for  other 
commodities  an  exchange  of  equivalent  or  equal  val- 
ues. If  the  quantity  were  greater  or  less,  it  would 
not  be  a  true  measure  of  values*  If  the  money  con- 
sist of  coin  and  eonvert.bie  paper,  the  aggregate 
quantity  will  still  be  twenty  dollars  per  cap- 
ita, because  the  paper  will  drive  out  of  circu- 
lation an  amount  of  coin  equal  to  itself.  So, 
if  it  consist  of  coin,  convertible  paper  and  legalized 
irredeemable  paper,  its  aggregate  will-  still  remain 
the  same,  since  the  latter  will  expel  of  the  other  two 
an  amount  equal  to  its  own  issue.  Hence,  Govern- 
ment paper  money,  made  a  legal  tender,  might  be 
issued  to  the  extent  of  $20  per  capita,  without  danger 
of  ultimate  debasement  of  the  currency  ;  and  if  the 
amount  could  be  kept  within  that  limit,  it  would 
be  the  best  and  most  uniform  currency  ev«r  known. 
The  danger  and  the  mischief  are  in  transcending  the 
limit  of  $20  to  one  of  population,  which  is  the  pro- 
portion that  the  laws  of  trade  award  when  the  cur- 
rency consists  of  coin,  or  of  coin  and  convertible 
piaper. 

Estimating  the  population  of  the  loyal  States  at  20,- 
600,000,  we  need  a  currency  of  $400,000,000,  PMor  to 
the  late  bank  suspension  we  had  of  coin,  bank  depos- 
its and  bank  circulation,  about  that  amount.  It  is 
now  much  less,  because  the  suspension  at  once  ban- 
ished most  of  the  coin  from  circulation,  and  also  di- 
minished the  circulation  of  ^ank  notes.  This  leave* 
a  fitting  opening  for  Government  paper  money.  It-  is 
needed  to  fill  the  existing  vacuom.  I  think  nearly 
$100,009/00  would  be  thus  absorbed  without  produc- 
ing any  sensible  effect  on  nrices  or  o»  the  circulation 
of  bank  notes.  Theissue«f  $150,00fr,000,  as  proposed, 
would,  however,  at  first  slightly  enlarge  thecurrency,, 
and  thus  enhance  prices  ;  but  it  would  be  merely  suf- 
ficient to  give  a  healthy  stimulus  tobusiaees,  and 
thus  enable  the  community  with  facility  and  prompti- 
tude to  pay  their  debts  and  the  heavy  taxes  which 
await  them.  And  even  this  stimulus  woeld  not  be  of 
long  continuance,  for  the  Government  money  would 
ultimately  displace  an  equal  amount  of  coin  and  bank 

P-'t<  • 


u  a.t-MV  sapii«nD  -la.uoi  ;<\\i 

UTS  aaaag  aug  JQJ  pajsixa  pm:uiap 

tv.d  v  ijainb  A!3Ai}BJBt!uioos«/* '.' 

U  3m.mp  'ia^iT!Uj"io()A\  sqj, «    '•  snui  MaiAoi 

ip  'au}{  S]q>  u;   sjuauiaAOiu  aqj, — T[OOAV 
XiiAf.aq  3u]sop  lanamu  aqi' 


7981  'IE  - 


'X.iBnuer  jo  muoui  aq;  Supnp 


•«  A 

eaxoq 


—  A\cmv  J, 


uaaq    3A 
OH  '-io)  A 
sqt  0%  'oojduiBj,  Oi)0'8  331^8 


an?  iaa(i—  SNIHS 
o  Aq  pauwo  a\  uop.iod 
JQ    >s8e(l  ESI-'S  'VOA-M9N  01 


Mr.  Op 

To  Hon.  S.  P.  C"> 


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